Legislature(2009 - 2010)BARNES 124

03/27/2009 01:00 PM House RESOURCES


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Audio Topic
01:02:53 PM Start
01:03:26 PM Psio Update Briefing
01:50:58 PM Alaska Risk Assessment Update
02:35:10 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ PSIO Update Briefing by Allison Iversen, TELECONFERENCED
Coordinator, Petroleum Systems Integrity
Office, Dept. of Natural Resources
+ Alaska Risk Assessment Update by Larry TELECONFERENCED
Dietrick, Director, Division of Spill
Prevention & Response; Ira Rosen, Risk
Assessment Manager, Dept. of
Environmental Conservation
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                         March 27, 2009                                                                                         
                           1:03 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Craig Johnson, Co-Chair                                                                                          
Representative Mark Neuman, Co-Chair                                                                                            
Representative Bryce Edgmon                                                                                                     
Representative Paul Seaton                                                                                                      
Representative Peggy Wilson                                                                                                     
Representative David Guttenberg                                                                                                 
Representative Chris Tuck                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Kurt Olson                                                                                                       
Representative Scott Kawasaki                                                                                                   
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW(S):                                                                                                                    
                                                                                                                                
PSIO Update Briefing                                                                                                          
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
Alaska Risk Assessment Update                                                                                                 
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to report                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
ALLISON IVERSEN, Coordinator                                                                                                    
Petroleum Systems Integrity Office                                                                                              
Division of Oil & Gas                                                                                                           
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Provided a briefing about the duties and                                                                 
accomplishments of the Petroleum Systems Integrity Office                                                                       
(PSIO).                                                                                                                         
                                                                                                                                
IRA ROSEN, Project Manager                                                                                                      
Alaska Risk Assessment Project                                                                                                  
Industry Preparedness & Pipeline Program                                                                                        
Division of Spill Prevention & Response                                                                                         
Department of Environmental Conservation                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Provided an  update and  answered questions                                                             
regarding Alaska's Risk Assessment Project.                                                                                     
                                                                                                                                
LARRY DIETRICK, Director                                                                                                        
Division of Spill Prevention & Response                                                                                         
Department of Natural Resources                                                                                                 
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Provided information  about Alaska's  Risk                                                             
Assessment Project.                                                                                                             
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:02:53 PM                                                                                                                    
                                                                                                                              
CO-CHAIR  CRAIG  JOHNSON  called  the  House  Resources  Standing                                                             
Committee  meeting  to  order  at   1:03  p.m.    Representatives                                                               
Johnson,  Neuman, Guttenberg,  Wilson,  Seaton,  and Edgmon  were                                                               
present at  the call  to order.   Representative Tuck  arrived as                                                               
the meeting was in progress.                                                                                                    
                                                                                                                                
^OVERVIEW(S):                                                                                                                 
                                                                                                                                
^PSIO Update Briefing                                                                                                         
                                                                                                                              
1:03:26 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  JOHNSON  announced that  the  first  order of  business                                                               
would be  a briefing  on the  Petroleum Systems  Integrity Office                                                               
(PSIO).                                                                                                                         
                                                                                                                                
ALLISON   IVERSEN,  Coordinator,   Petroleum  Systems   Integrity                                                               
Office, Division of  Oil & Gas, Department  of Natural Resources,                                                               
began her PowerPoint presentation with  an example of why quality                                                               
management  is  so important  in  oil  and  gas oversight.    She                                                               
related that  construction of a  Petrobras floating  oil platform                                                               
off the  coast of  Brazil was  completed in  May 2000  [slide 2].                                                               
Soon  after, a  Petrobras executive  gave  a speech  in which  he                                                               
stated that  the project  "successfully rejected  the established                                                               
constricting    and   negative    influences   of    prescriptive                                                               
engineering, onerous quality  requirements, and outdated concepts                                                               
of inspection and client control."   [Less than a year later] two                                                               
explosions  on   the  platform  killed   11  people   [slide  3].                                                               
Inadequate  safety  inspections  and no  quality  assurance  were                                                               
blamed  for the  incident, she  said.   In  response to  Co-Chair                                                               
Neuman, she  clarified that  the Petrobras  platform was  off the                                                               
coast of  Brazil, not Alaska.   In response to  Co-Chair Johnson,                                                               
she  said  the Petrobras  platform  was  in production  when  the                                                               
explosions occurred.                                                                                                            
                                                                                                                                
1:06:35 PM                                                                                                                    
                                                                                                                                
MS.  IVERSEN   explained  that  the   PSIO  was   established  by                                                               
Administrative Order  in April 2007  [slide 4].  The  PSIO's four                                                               
primary  tasks  are  to:    coordinate  activities  among  state,                                                               
federal,  and local  agencies;  perform incident  investigations;                                                               
conduct  the Gap/Overlap  Analysis Project;  and look  at quality                                                               
management.                                                                                                                     
                                                                                                                                
MS. IVERSEN  said the PSIO has  one or more designated  points of                                                               
contact  within  certain  liaison  agencies  [slide  5].    These                                                               
agencies are:   Department of Environmental  Conservation, Alaska                                                               
Department  of   Fish  &  Game,  Department   of  Public  Safety,                                                               
Department of  Transportation & Public Facilities,  Department of                                                               
Revenue, Department of Labor  & Workforce Development, Department                                                               
of  Law, Department  of  Natural Resources,  Alaska  Oil and  Gas                                                               
Conservation Commission (AOGCC), the  Alaska governor's office in                                                               
Washington, DC, the North Slope Borough, and federal agencies.                                                                  
                                                                                                                                
1:07:37 PM                                                                                                                    
                                                                                                                                
MS. IVERSEN,  in response to  Co-Chair Neuman, said the  PSIO has                                                               
the most  frequent contact with the  Departments of Environmental                                                               
Conservation,   Public  Safety,   Revenue,   Labor  &   Workforce                                                               
Development, the Alaska Oil and  Gas Conservation Commission, and                                                               
the other  divisions within the Department  of Natural Resources.                                                               
In further response, she reported  that the most common incidents                                                               
the  PSIO is  notified about  are pipeline  leaks that  typically                                                               
fall  under  the  purview  of  the  Department  of  Environmental                                                               
Conservation  (DEC) or  the  U.S.  Department of  Transportation.                                                               
Some  pipeline  incidents  have  been  fallen  outside  of  those                                                               
agencies, she added,  so the PSIO stepped in  on those incidents.                                                               
The  PSIO  also  receives  notifications   from  the  public  and                                                               
employees  about employee  concerns,  she continued.   Those  are                                                               
typically  about worker  safety so  they are  coordinated through                                                               
the Department  of Labor &  Workforce Development,  although they                                                               
are  sometimes  handled  by  the fire  marshal's  office  or  the                                                               
electrical inspector's office.                                                                                                  
                                                                                                                                
1:09:45 PM                                                                                                                    
                                                                                                                                
MS.  IVERSEN,  in  response to  another  question  from  Co-Chair                                                               
Neuman, said the  PSIO receives notification of  all spills, most                                                               
of which are small spills.   Multiple fires occurred on the North                                                               
Slope  a  few years  ago,  she  continued,  so incidents  can  be                                                               
unpredictable.   Everyone, including  industry, always  hopes the                                                               
number of incidents  will be zero.  Generally,  the incidents are                                                               
pipeline  failure, and  these  failures  have included  pipelines                                                               
carrying oil,  gas, sea water, produced  water, and rehabilitated                                                               
sewage water.   In  response to  Co-Chair Johnson,  she explained                                                               
that the incident  involving sewage effluent was  a pipeline that                                                               
carried  treated water  from  an industry  facility  and it  fell                                                               
under   the   purview   of  the   Department   of   Environmental                                                               
Conservation.     In  response  to  Representative   Seaton,  she                                                               
deferred to  the Department of  Environmental Conservation  as to                                                               
whether treated sewage  effluent is discharged on  the surface or                                                               
re-injected.                                                                                                                    
                                                                                                                                
1:12:50 PM                                                                                                                    
                                                                                                                                
MS.  IVERSEN  said  event   notification  and  investigation  are                                                               
coordinated among the agencies [slide 6].   When a spill or other                                                               
event falls under an agency's  jurisdiction, the company notifies                                                               
a specific agency or agencies  directly, she explained.  However,                                                               
the PSIO receives some notifications  that other agencies do not.                                                               
The goal  is to keep all  of the agencies aware  of any incidents                                                               
so  they  can  respond.     Another  coordinated  effort  is  the                                                               
circulation of  employee and  public concerns,  she said.   These                                                               
concerns can  impact multiple agencies  and the goal is  to limit                                                               
the amount  of time that each  agency has to spend  on a concern.                                                               
Other  coordinated efforts  include  regular liaison  interaction                                                               
and  regular contact  with local,  state,  and federal  entities.                                                               
The goal  is to  combat the  "silo effect"  and ensure  that each                                                               
agency is aware and working together as much as possible.                                                                       
                                                                                                                                
MS.  IVERSEN pointed  out that  the  PSIO steps  in when  another                                                               
agency does not  have jurisdiction [slide 7].   One such incident                                                               
was the  September 2008  rupture of  the BP  Exploration (Alaska)                                                               
Inc.  "Y-Pad  artificial  lift   gas  pipeline".    Another  such                                                               
incident was the January 2009 "Pump Station 1 pigging incident".                                                                
                                                                                                                                
1:15:14 PM                                                                                                                    
                                                                                                                                
CO-CHAIR NEUMAN noted  that Pump Station 1 almost  blew up during                                                               
the  pigging incident,  so he  was therefore  surprised to  learn                                                               
that  no  regulations  or  statutes  were  violated  during  that                                                               
incident.  The legislature is  concerned about such incidents and                                                               
wants to be informed about them, he said.                                                                                       
                                                                                                                                
CO-CHAIR  JOHNSON added  that one  of  the reasons  the PSIO  was                                                               
started is because of gaps in  which agency is in charge and gaps                                                               
in regulations.                                                                                                                 
                                                                                                                                
MS. IVERSEN stated  that each of these two incidents  can be tied                                                               
back  to quality  management,  along with  a  company having  the                                                               
right  procedures  in  place  and  whether  there  is  any  state                                                               
oversight of the procedures.                                                                                                    
                                                                                                                                
1:17:05 PM                                                                                                                    
                                                                                                                                
MS. IVERSEN  said the goal  of the gap  analysis is to  provide a                                                               
comprehensive and  cost-effective approach to state  oversight of                                                               
oil and  gas facilities, equipment,  and infrastructure,  as well                                                               
as  activities on  state oil  and  natural gas  units and  leases                                                               
[slide 8].   The PSIO is  looking for gaps in  infrastructure and                                                               
activity inspection  and oversight, as well  as identifying where                                                               
there  are   overlaps  in   oversight  of   the  same   piece  of                                                               
infrastructure or activity.                                                                                                     
                                                                                                                                
MS. IVERSEN reviewed the process  for conducting the gap analysis                                                               
[slide 9].  She said the  PSIO first identified the statutory and                                                               
regulatory authorities  of the various  agencies and has  hired a                                                               
contractor  to identify  how these  authorities are  implemented.                                                               
Authorities can be  broad on paper, but there can  be gaps in how                                                               
an authority is  implemented on the ground.   The contractor will                                                               
verify the  gaps that  the PSIO  has already  found on  paper and                                                               
will also  identify any  overlaps.   In addition,  the contractor                                                               
will look  at the  risks associated with  any gaps  and overlaps.                                                               
She pointed  out that the PSIO  is working closely with  the Risk                                                               
Assessment  Project so  that efforts  are not  duplicated and  to                                                               
ensure  that the  PSIO is  working only  on the  risks that  fall                                                               
outside the scope of the risk assessment.                                                                                       
                                                                                                                                
1:18:47 PM                                                                                                                    
                                                                                                                                
MS. IVERSEN, in response to  Co-Chair Johnson, confirmed that the                                                               
PSIO is looking at any  gaps between the statutory and regulatory                                                               
authorities.     She  explained  that  sometimes   the  statutory                                                               
authority  is really  broad, yet  the regulations  may not  be as                                                               
broad  as what  is  in the  statute.   In  further response,  she                                                               
confirmed that these  gaps will be included in  the analysis that                                                               
the legislature  receives.  The  analysis [report] will  serve as                                                               
an  educational  tool  that identifies  the  gaps  and  overlaps.                                                               
These gaps  and overlaps will  be verified by the  other agencies                                                               
before they are included in the analysis.                                                                                       
                                                                                                                                
MS. IVERSEN, in response to  an additional question from Co-Chair                                                               
Johnson, allowed that  the PSIO has not  [coordinated with anyone                                                               
in the  legislature] at this  point in  time, but she  offered to                                                               
look into this.   She added that the gap  analysis report will go                                                               
to the "resources  sub-cabinet" and decisions on what  to do with                                                               
the identified gaps and overlaps  will be made by the sub-cabinet                                                               
and the legislature.                                                                                                            
                                                                                                                                
MS. IVERSEN, in  response to Co-Chair Neuman,  explained that the                                                               
"resources  sub-cabinet" is  made  up of  the commissioners  that                                                               
deal with  resource management.   She further explained  that the                                                               
gap  analysis report  will be  available  to the  public and  the                                                               
legislature, and  will include the  PSIO's recommendations.   She                                                               
agreed to notify legislators when the report becomes available.                                                                 
                                                                                                                                
1:21:39 PM                                                                                                                    
                                                                                                                                
MS. IVERSEN directed  attention to slide 10  of her presentation,                                                               
noting  that Arcadis  is the  contractor reviewing  and compiling                                                               
the data  that the PSIO  has already  collected.  The  results of                                                               
this  review are  expected  in  August 2009,  she  said, but  the                                                               
contractor is dependent on receiving  responses from the agencies                                                               
and this  could affect the expected  timing.  In response  to Co-                                                               
Chair Neuman, she  said the Arcadis contract is  for $293,000 and                                                               
no  further costs  will  be incurred  even if  there  is a  delay                                                               
beyond August 2009.                                                                                                             
                                                                                                                                
MS. IVERSEN, in  response to Co-Chair Johnson,  affirmed that the                                                               
PSIO  has  been  receiving  good  cooperation  from  all  of  the                                                               
departments.  She  added that any delays have not  been from lack                                                               
of  support,  but  from  being overworked.    The  agencies  also                                                               
cooperated  in reviewing  contractor proposals  and choosing  the                                                               
contractor, she said.                                                                                                           
                                                                                                                                
1:24:08 PM                                                                                                                    
                                                                                                                                
MS. IVERSEN  reviewed the inter-relation  between the  PSIO's Gap                                                               
Analysis and the  DEC Alaska Risk Assessment  Project [slide 11].                                                               
She  said both  projects are  tools for  determining how  best to                                                               
allot the state's limited resources  toward oil and gas oversight                                                               
in the  future.  Gaps  will likely need  to be filled  where high                                                               
risks exist in  areas of no oversight.  Where  low risks exist in                                                               
areas  of  duplicative oversight,  the  overlaps  will likely  be                                                               
decreased by better coordination with the other agencies.                                                                       
                                                                                                                                
MS. IVERSEN, in  response to Co-Chair Johnson, said  that Black &                                                               
Veach,  the subcontractor  for Arcadis,  is not  involved in  the                                                               
Risk Assessment  Project.  In  further response, she  stated that                                                               
the main  contractor for  that project is  Doyon Emerald  and the                                                               
technical support is being provided by ABS Consulting.                                                                          
                                                                                                                                
1:25:25 PM                                                                                                                    
                                                                                                                                
MS. IVERSEN  specified that PSIO's Quality  Management Program is                                                               
looking  at  the practices,  policies,  and  procedures that  are                                                               
utilized  by  companies to  meet  the  statutory requirements  in                                                               
their daily business activities [slide  12].  The program is also                                                               
reviewing the state's policies and procedures for doing its job.                                                                
                                                                                                                                
MS.  IVERSEN  said  quality  management can  be  broken  down  to                                                               
quality  assurance, quality  control,  and the  Plan, Do,  Check,                                                               
Adjust Cycle [slides  13-15].  Quality assurance  is the planning                                                               
side of  quality management,  she explained.   It is  the process                                                               
used   to   determine   whether   a  project   is   meeting   the                                                               
characteristics that are being sought.   It establishes the rules                                                               
and methods  that will  be used.   She  pointed out  that quality                                                               
control  is  the  "check element"  for  determining  whether  the                                                               
desired product  was received and  it establishes how  to measure                                                               
or test  the product.  The  Plan, Do, Check, Adjust  (PDCA) Cycle                                                               
begins with  planning the  mission, requirements,  and objectives                                                               
and then  moves to the  procedures, processes, and methods.   All                                                               
of these  have been a  key element of PSIO's  investigations, she                                                               
said.    [Quality  control]  is   done  by  conducting  tests  to                                                               
determine  that the  correct procedures  and processes  are being                                                               
used, and  then adjustments  are made to  improve or  correct the                                                               
processes.   The fundamentals of  quality management  systems are                                                               
quality control,  quality assurance, monitoring,  inspection, and                                                               
any other  practices that  are used to  ensure the  integrity and                                                               
reliability of the systems [slide 16], she summarized.                                                                          
                                                                                                                                
1:27:44 PM                                                                                                                    
                                                                                                                                
MS. IVERSEN  discussed what the  agencies can expect from  or ask                                                               
of the  PSIO [slide 17].   She said the  PSIO can help  an agency                                                               
understand the  benefits of  a quality  management program.   For                                                               
example, instead of an agency  asking a company whether a certain                                                               
piece of infrastructure has been  inspected this year, the agency                                                               
could  ask the  company  if  it has  a  procedure  in place  that                                                               
directs  the inspection  of that  infrastructure annually.   This                                                               
procedure would serve to capture  any missed inspections, whether                                                               
employees  are   trained  properly,  and  how   to  document  the                                                               
inspections.                                                                                                                    
                                                                                                                                
MS.  IVERSEN, in  response  to Co-Chair  Neuman,  stated that  it                                                               
depends upon the  company and the piece of  infrastructure [as to                                                               
whether  industry   had  a  good   program  in  place   prior  to                                                               
establishment  of  the  PSIO].    Alaskan  companies  do  utilize                                                               
quality  management systems,  she  said, and  they  do utilize  a                                                               
risk-based  approach,  which  is   appropriate.    Recent  events                                                               
indicate that  the companies did  not fail to have  procedures in                                                               
place;  they  failed to  have  the  proper procedures  in  place.                                                               
Having   a  procedure   for  capturing   missed  inspections   is                                                               
critically important, she noted.   The state can become more pro-                                                               
active by  looking at company  procedures and  understanding them                                                               
better.  The  companies are really working  on quality management                                                               
and BP  is implementing a world-wide  quality management program.                                                               
She   said   quality   management  would   include   establishing                                                               
procedures  for  when  something  is  fixed,  when  something  is                                                               
inspected, how  a missed inspection is  captured, how contractors                                                               
are trained and what they are trained to look for, and so forth.                                                                
                                                                                                                                
1:31:50 PM                                                                                                                    
                                                                                                                                
MS.  IVERSEN, in  response  to  Representative Edgmon,  explained                                                               
that  the PSIO's  authority stems  from the  oil and  gas leases,                                                               
which is  why the PSIO  is located within  the Division of  Oil &                                                               
Gas.   Before investigating  an incident, the  PSIO talks  to the                                                               
division  director Kevin  Banks and  the department  commissioner                                                               
Tom Irwin.                                                                                                                      
                                                                                                                                
MS.  IVERSEN, in  response to  Representative Tuck,  said she  is                                                               
unaware of  any other  states that have  a statewide  agency like                                                               
the PSIO, particularly  an agency that looks  at industry quality                                                               
management.    She  noted  that  the  Joint  Pipeline  Office,  a                                                               
consortium  of state  and federal  agencies, oversees  the common                                                               
carrier  pipelines  in  Alaska   and  the  PSIO  coordinates  the                                                               
activities upstream of the pipelines.                                                                                           
                                                                                                                                
MS.  IVERSEN, in  response to  Co-Chair Neuman,  allowed that  at                                                               
this point  the PSIO has been  in a reactive mode  [rather than a                                                               
pro-active  mode] in  regard to  the building  of new  pipelines.                                                               
She said the  PSIO would not review the design  of a new pipeline                                                               
because that  is not part  of its mandate.   If it  is identified                                                               
that this is a gap because  other agencies are not doing it, then                                                               
it  could be  assigned  to  the PSIO  or  another  agency in  the                                                               
future.  She  pointed out that the Joint Pipeline  Office does do                                                               
pro-active  reviews of  pipelines, one  example being  the recent                                                               
Kachemak pipeline extension.                                                                                                    
                                                                                                                                
1:35:26 PM                                                                                                                    
                                                                                                                                
MS. IVERSEN,  in response  to Co-Chair  Johnson, stated  that the                                                               
PSIO  has very  good  working relationships  with the  companies.                                                               
Although the  PSIO has  not worked  as closely  with some  of the                                                               
newer  and smaller  companies  in the  state,  she continued,  it                                                               
anticipates doing so as soon as the gap analysis is complete.                                                                   
                                                                                                                                
MS. IVERSEN,  in further response  to Co-Chair Johnson,  said the                                                               
PSIO has not  looked at the smaller companies enough  [to be able                                                               
to  say there  is a  difference  between the  larger and  smaller                                                               
companies as  far as the  quality management procedures  that are                                                               
employed].   With  quality management,  it is  not necessarily  a                                                               
case of one  size fits all, she said.   A company's procedure for                                                               
monitoring what it does and  ensuring that it is operating safely                                                               
will vary  based upon  the company.   However, companies  will be                                                               
required  to   utilize  a  risk-based  approach   and  continuous                                                               
improvement.   She agreed that the  best way for the  state to be                                                               
pro-active  is  to delve  into  all  of the  companies  operating                                                               
within Alaska regardless of their size.                                                                                         
                                                                                                                                
1:38:20 PM                                                                                                                    
                                                                                                                                
MS. IVERSEN, in response  to Representative Guttenberg, explained                                                               
that looking  at federal statutes  and regulations and  how those                                                               
interact with what  the state is doing is part  of the PSIO's gap                                                               
analysis.    The PSIO  is  working  very  closely with  the  U.S.                                                               
Department of  Transportation's Pipeline and  Hazardous Materials                                                               
Safety  Administration (PHMSA),  the  largest  federal player  in                                                               
regard to pipelines.   The Department of Natural  Resources has a                                                               
Letter of Intent  with PHMSA, she said, so the  two agencies work                                                               
together very closely.  Other  federal agencies, such as the U.S.                                                               
Coast  Guard and  the Environmental  Protection  Agency are  also                                                               
being included in the Gap Analysis.                                                                                             
                                                                                                                                
MS. IVERSEN,  in further  response to  Representative Guttenberg,                                                               
said she is unaware of  any instances in which state jurisdiction                                                               
ends  and   entities  like  a   borough  or  city  pick   up  the                                                               
jurisdiction.   She  specified that  local distribution  systems,                                                               
such  as Fairbanks  Natural Gas,  LLC, are  overseen by  the U.S.                                                               
Department  of Transportation,  although something  having to  do                                                               
with fires might default to a local fire fighting entity.                                                                       
                                                                                                                                
CO-CHAIR JOHNSON offered his opinion  that Fairbanks Natural Gas,                                                               
LLC, is a common carrier and  would therefore fall outside of the                                                               
PSIO's responsibility.                                                                                                          
                                                                                                                                
MS. IVERSEN agreed that this is the case for distribution.                                                                      
                                                                                                                                
MS. IVERSEN, in  response to Co-Chair Neuman,  noted that bonding                                                               
occurs at  a number of different  stages, such as bonding  by the                                                               
Alaska  Oil  and  Gas   Conservation  Commission,  Department  of                                                               
Environmental Conservation, and DNR's Division  of Oil & Gas.  In                                                               
regard to  the details of  bonding for  a spill, she  deferred to                                                               
Larry Dietrick of DEC.                                                                                                          
                                                                                                                                
1:42:32 PM                                                                                                                    
                                                                                                                                
MS. IVERSEN  commenced with  her presentation,  discussing PSIO's                                                               
expectations of agencies, including itself  [slide 18].  She said                                                               
the PSIO  is specifically starting  with itself and  the Division                                                               
of Oil &  Gas and is making  sure that it meets the  needs of its                                                               
clients,  which  include  the   legislature,  industry,  and  the                                                               
public.   The  expectations include  the documentation  of PSIO's                                                               
evaluations of oil and  gas facilities, effectively communicating                                                               
with industry, and working with  the other agencies to coordinate                                                               
the review  of their  evaluations and  identifying any  gaps that                                                               
are discovered.                                                                                                                 
                                                                                                                                
MS.  IVERSEN said  the  PSIO expects  each  petroleum company  to                                                               
provide  evidence of  its quality  management system  [slide 19].                                                               
This includes how  the company is implementing  its programs, how                                                               
it  knows  whether the  programs  are  effective, and  how  those                                                               
programs are  evaluated by upper  management and  implemented all                                                               
the way down through the company to its contractors.                                                                            
                                                                                                                                
1:43:56 PM                                                                                                                    
                                                                                                                                
MS.  IVERSEN, in  response to  Representative Edgmon,  said there                                                               
will  be consideration  of whether  to establish  the PSIO  under                                                               
statute or regulation  once the gap analysis is  completed and it                                                               
is  known what  statutes  and regulations  would  make sense  for                                                               
filling  gaps without  creating  any overlaps.    In response  to                                                               
further  questions from  Representative Edgmon,  she stated  that                                                               
the PSIO  has regulatory  authority that  stems from  the leases,                                                               
but no  enforcement authority.   Funding of  the PSIO  comes from                                                               
the general fund  rather than program funding.   For any offshore                                                               
oil development,  she said the PSIO  would play the same  role it                                                               
is  playing  now in  the  coordination  of efforts  for  anything                                                               
upstream  of  a  common  carrier  pipeline.    The  Coastal  Zone                                                               
Management Program is part of the  PSIO's gap analysis, but it is                                                               
limited to  information exchange, she  said.  She added  that the                                                               
Division  of  Oil &  Gas  works  closely  with the  Coastal  Zone                                                               
Management Program on permits.                                                                                                  
                                                                                                                                
CO-CHAIR JOHNSON  offered his belief  that the PSIO would  take a                                                               
more active role in the  Coastal Zone Management Program when and                                                               
if there is offshore development.                                                                                               
                                                                                                                                
1:47:33 PM                                                                                                                    
                                                                                                                                
MS. IVERSEN,  in response to Representative  Guttenberg, said she                                                               
is  only  vaguely  familiar  with  the  Dismantling,  Removal,  &                                                               
Restoration  (DR&R)  Fund.    She  suggested  that  any  specific                                                               
questions  about the  fund be  directed to  DNR Commissioner  Tom                                                               
Irwin.  In  further response, she said she does  not know why the                                                               
DR&R Fund  has not been  included in  the gap analysis,  but that                                                               
she would get information back to members in this regard.                                                                       
                                                                                                                                
CO-CHAIR  JOHNSON commented  that he  believes the  DR&R Fund  is                                                               
beyond  the   PSIO,  but  he   would  appreciate   receiving  any                                                               
information as well.                                                                                                            
                                                                                                                                
REPRESENTATIVE  GUTTENBERG explained  that the  DR&R Fund  is the                                                               
money  that the  industry  is  supposed to  be  setting aside  to                                                               
remove all  the Trans-Alaska Pipeline System's  pump stations and                                                               
pipe.  It is  supposed to be a separate fund  within the books of                                                               
each oil company.                                                                                                               
                                                                                                                                
CO-CHAIR JOHNSON offered his belief that  it is a per barrel fund                                                               
that has been accumulating since day one.                                                                                       
                                                                                                                                
^Alaska Risk Assessment Update                                                                                                
                                                                                                                              
1:50:58 PM                                                                                                                    
                                                                                                                                
CO-CHAIR JOHNSON announced that the  next order of business would                                                               
be an update on Alaska's Risk Assessment Project.                                                                               
                                                                                                                                
IRA  ROSEN,  Project  Manager, Alaska  Risk  Assessment  Project,                                                               
Industry  Preparedness  &  Pipeline Program,  Division  of  Spill                                                               
Prevention & Response,  Department of Environmental Conservation,                                                               
began  his PowerPoint  presentation by  explaining that  the Risk                                                               
Assessment  Project is  a three-year,  $5  million initiative  to                                                               
evaluate  the   operational  safety  of  Alaska's   oil  and  gas                                                               
infrastructure [slide  2].   The study is  partly the  outcome of                                                               
some of the spills, leaks,  and corrosion that were discovered on                                                               
the North Slope several years ago,  he related.  When the project                                                               
is  completed,  it  will be  an  engineering-oriented  assessment                                                               
intended to identify  and rank the risks, and those  are based on                                                               
consequences  to  state  revenue,  safety,  and  the  environment                                                               
[slide 3].   The study's intent is to answer  the question:  what                                                               
are  the  risks involved  in  operating  the system  for  another                                                               
generation?                                                                                                                     
                                                                                                                                
MR.  ROSEN  said the  project  will  provide  a snapshot  of  the                                                               
physical  condition of  the infrastructure.   "The  entire system                                                               
will be broken  down into small pieces, each one  of those pieces                                                               
will be  evaluated and  ranked to  identify the  most significant                                                               
risks," he stated.  Results will be published in summer 2010.                                                                   
                                                                                                                                
MR. ROSEN,  in response to  Co-Chair Neuman, specified  that this                                                               
project is not intended to  be either enforcement or a regulatory                                                               
action; it  is simply a  reconnaissance to look at  the condition                                                               
of the  infrastructure.   However, he said  that action  would be                                                               
taken if something outside the norm is found.                                                                                   
                                                                                                                                
1:54:54 PM                                                                                                                    
                                                                                                                                
MR. ROSEN,  in response  to Co-Chair  Johnson, confirmed  that if                                                               
something  wrong was  found,  it  would not  be  ignored and  the                                                               
proper agency would  be notified.  He noted that  due to the type                                                               
of information that  is being looked for, as well  as the limited                                                               
time and  budget, the assessment  will not involve  much physical                                                               
inspection.    In further  response,  he  said the  project  will                                                               
review  existing   information,  evaluate  spill   and  corrosion                                                               
reports,  and   look  at  previous  risk   assessments,  business                                                               
practices,  and operating  procedures.   Although the  project is                                                               
taking  place  primarily  in  the  office,  he  said  the  public                                                               
participation process  allows for anonymous input  so anyone with                                                               
information  can   participate,  including   industry  employees.                                                               
Action  would   be  taken  on  any   information  that  indicates                                                               
something is illegal or inappropriate.                                                                                          
                                                                                                                                
REPRESENTATIVE  WILSON  asked  how the  physical  conditions  are                                                               
being evaluated given that no one is actually going onsite.                                                                     
                                                                                                                                
MR. ROSEN  replied that information  is coming from  the industry                                                               
and there is information already  in existence, such as corrosion                                                               
and spill reports.   The format of the risk  assessment itself is                                                               
brainstorming  by people  who are  familiar with  these types  of                                                               
infrastructure.   They will break the  entire infrastructure into                                                               
pieces, he  said, and then  they will brainstorm  scenarios about                                                               
what types  of things  could go wrong  and what  the consequences                                                               
would  be if  those  things did  go wrong.    The probability  of                                                               
something going wrong  and the consequence if that  does go wrong                                                               
are taken  together to  come up  with a  numerical value  for the                                                               
risk, he explained.                                                                                                             
                                                                                                                                
1:57:28 PM                                                                                                                    
                                                                                                                                
CO-CHAIR NEUMAN pointed  out that what is designed  on paper does                                                               
not necessarily match up with what is actually in the field.                                                                    
                                                                                                                                
MR. ROSEN  reiterated that the  intent is  to take a  snapshot of                                                               
the conditions of the infrastructure  at the time the project was                                                               
started, which  was last summer.   Staff are looking at  how this                                                               
infrastructure  was  intended to  be  used  and reviewing  actual                                                               
reports  of  what  has  happened  since  the  infrastructure  was                                                               
designed  and built.   The  report  may well  recommend that  the                                                               
findings  be augmented  through additional  studies, he  allowed,                                                               
and  those  additional studies  would  likely  include some  site                                                               
investigation.  The  scope of the assessment has been  fit to the                                                               
funding and  time available  for the  project, he  explained, and                                                               
these  do not  allow much  time  for on-site  investigation.   In                                                               
addition,  it would  be an  overwhelming task  because there  are                                                               
about  250 separate  facilities.   Other agencies  conduct actual                                                               
physical inspection and that is  part of the information that the                                                               
project  is  evaluating.    He  said he  is  unaware  of  a  risk                                                               
assessment of  this scale being  undertaken anywhere else  in the                                                               
world.   The  project  will  also be  looking  at the  interfaces                                                               
between one company and another to see how the systems work.                                                                    
                                                                                                                                
2:00:02 PM                                                                                                                    
                                                                                                                                
MR. ROSEN,  in response to Representative  Seaton, explained that                                                               
the  physical condition  of equipment  will be  evaluated at  the                                                               
individual facilities  by looking at the  records of maintenance,                                                               
improvements,  and  changes.   Many  facilities  will  have  some                                                               
equipment   that   has   been   replaced   since   the   original                                                               
construction, some that is brand  new, and some equipment that is                                                               
near the end  or past the end  of its design life.   Those things                                                               
will be  taken into consideration when  evaluating the likelihood                                                               
of a risk event occurring, he  said.  For example, a new facility                                                               
less than four  years old has a lower likelihood  of an unplanned                                                               
incident  than  a  30-year-old  facility  that  has  had  limited                                                               
maintenance.                                                                                                                    
                                                                                                                                
MR.  ROSEN,   in  further  response  to   Representative  Seaton,                                                               
specified  that  the  driving factor  for  undertaking  the  Risk                                                               
Assessment  Project  was  to  look  at  possible  disruptions  to                                                               
revenue  to the  state,  but  the project  was  expanded to  also                                                               
include  impacts  to  safety  and the  environment.    Given  the                                                               
assumption that  this system  will continue  to be  operated into                                                               
the future and the equipment  used for thirty-plus years, he said                                                               
the question  is:  What are  the risks inherent in  continuing to                                                               
operate the system?  For example,  there have been changes to the                                                               
amount and  type of oil  itself and the assessment  will consider                                                               
what the significant risks are from this.                                                                                       
                                                                                                                                
2:04:34 PM                                                                                                                    
                                                                                                                                
LARRY  DIETRICK,   Director,  Division  of  Spill   Prevention  &                                                               
Response, Department  of Natural  Resources, added that  the Risk                                                               
Assessment Project was conceived after  the "GC-2 event" in 2006.                                                               
He said  two things happened at  this event that got  the state's                                                               
attention:   1)  it was  the first  shutdown of  the Prudhoe  Bay                                                               
field, and 2) soon after  the incident industry made the business                                                               
decision to  continue operating the  field through  investment in                                                               
Prudhoe Bay  for another  50 years.   The fundamental  premise of                                                               
the Risk  Assessment, he explained,  is to provide a  snapshot of                                                               
the condition  of the  oil and gas  infrastructure in  Cook Inlet                                                               
and the  North Slope  for the purpose  of determining  what risks                                                               
are  posed  to  the  state  in regard  to  revenue,  safety,  and                                                               
environment if the system, which  has already had a 30-year life,                                                               
continues to operate for another 50 years.                                                                                      
                                                                                                                                
REPRESENTATIVE SEATON inquired whether  the assessment is looking                                                               
only at the  current type of oil  or will it be  looking at heavy                                                               
oil development and the changes  in infrastructure that that will                                                               
require.                                                                                                                        
                                                                                                                                
MR. ROSEN responded  that the assessment will  include looking at                                                               
factors such  as the changes  in the physical composition  of the                                                               
oil  itself and  the  related issues  of operating  temperatures,                                                               
reduction  in  through-put,  and whether  the  original  pipeline                                                               
sizing  remains  appropriate.    For  example,  he  noted,  these                                                               
factors can cause an increase in corrosion.                                                                                     
                                                                                                                                
2:07:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WILSON  commented that it  seems to her  that once                                                               
the snapshot has  been taken, more data will need  to be gathered                                                               
from the field.                                                                                                                 
                                                                                                                                
MR. ROSEN  answered that  any engineering  report worth  its salt                                                               
will include  the recommendation that  more study is needed.   He                                                               
said  the  project's  job  is  to  get  as  much  information  as                                                               
accurately  and appropriately  as  possible within  the time  and                                                               
funding constraints  the project has  been allotted.   In further                                                               
response, he said  the completion date for the  assessment is the                                                               
summer of 2010.                                                                                                                 
                                                                                                                                
2:10:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   GUTTENBERG   pointed   out  that   the   current                                                               
infrastructure  is  pretty  old  by some  standards.    The  GC-2                                                               
accident that shut down Prudhoe Bay  was caused by changes in the                                                               
oil  composition and  sediment levels,  he said.   These  changes                                                               
were being  checked and corrections  were being made  from inside                                                               
the facility, but outside the  facility the sediment was building                                                               
up in  the pipe and  making the pipe  heavier.  This  resulted in                                                               
the  pipe  settling,  which  in  turn caused  some  of  the  more                                                               
corrosive  elements to  settle out  and erode  the bottom  of the                                                               
pipe.   He further pointed out  that when oil is  pumped from the                                                               
well it is not completely  uniform and will have different levels                                                               
of  viscosity  and  sediment.   He  asked  whether  industry  has                                                               
testing  logs  that indicate  these  changes  and that  could  be                                                               
evaluated as part of the assessment.                                                                                            
                                                                                                                                
MR. ROSEN replied  that if that type of  information is available                                                               
from the industry it will be  incorporated into the project.  The                                                               
project  is   looking  for  operating  procedures   and  business                                                               
practices, he said.   Changes in the physical  composition of the                                                               
oil stream are  included in the project as these  changes do have                                                               
an   impact,  as   do  changes   in   through-put  and   physical                                                               
temperature.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG observed  that  engineers know  Alaska                                                               
well.    As an  example  he  cited  the 60-foot-long  skid  plate                                                               
located at  Paxson where a  geologic fault crosses  the pipeline.                                                               
The November 2, 2006, earthquake  moved the pipeline right to the                                                               
end of  that skid  plate, he said,  indicating that  someone knew                                                               
what they were doing.                                                                                                           
                                                                                                                                
2:15:00 PM                                                                                                                    
                                                                                                                                
CO-CHAIR JOHNSON asked  whether the state is incurring  a risk by                                                               
undertaking  the  risk  assessment  and  blessing  the  continued                                                               
operation of the system.                                                                                                        
                                                                                                                                
MR. ROSEN said  he thinks the answer  is no.  The  first phase of                                                               
this is risk  assessment and the second step  is risk management.                                                               
The  report will  identify the  most significant  risks that  the                                                               
project is able  to bring to the surface, but  the project is not                                                               
claiming that  those are the  only risks.   It is not  being said                                                               
that if  industry addresses these risks  it is off the  hook from                                                               
any  regulation or  subsequent disruption.    The information  is                                                               
being  provided  as  a  future management  tool  and  a  business                                                               
decision tool.  Once the  project makes its presentation, it will                                                               
be up to industry to make some kind of a response, he said.                                                                     
                                                                                                                                
CO-CHAIR  JOHNSON commented  that he  knows of  several companies                                                               
that  have  several  floors  of attorneys  in  Houston  that  are                                                               
looking at  all of  this.   Therefore, he said  he wants  to make                                                               
sure the state is not blessing this as a parameter.                                                                             
                                                                                                                                
2:16:54 PM                                                                                                                    
                                                                                                                                
MR.  ROSEN  continued his  presentation,  stating  that the  Risk                                                               
Assessment  Project  has  been  assigned  to  the  Department  of                                                               
Environmental  Conservation for  project management  and contract                                                               
administration [slide 4].  The  overall direction for the project                                                               
comes from the State Agency Oversight  Team, he said.  A contract                                                               
was  awarded to  Doyon  Emerald,  an Anchorage-based  engineering                                                               
firm with  expertise in  Alaska's oil and  gas industry,  and the                                                               
subcontractor is ABS  Consulting, a firm known  worldwide for its                                                               
expertise in large infrastructure risk assessments.                                                                             
                                                                                                                                
MR. ROSEN said the State Agency  Oversight Team is made up of all                                                               
of  the  Alaska  agencies  that   have  either  a  regulatory  or                                                               
oversight role of  the oil and gas industry  [The agencies listed                                                               
on   slide  5   included  the:     Department   of  Environmental                                                               
Conservation,  Department  of   Labor  &  Workforce  Development,                                                               
Department  of Law,  State Pipeline  Office and  PSIO within  the                                                               
Department  of Natural  Resources, Department  of Public  Safety,                                                               
Department  of  Revenue,  and Alaska  Oil  and  Gas  Conservation                                                               
Commission.]   He noted that  there is a representative  from the                                                               
University of Alaska in addition to the state agencies.                                                                         
                                                                                                                                
MR. ROSEN explained what a risk  assessment is [slide 6].  First,                                                               
the  system under  consideration is  broken down  into pieces  of                                                               
manageable  size,  which in  this  case  might be  an  individual                                                               
facility or  section of pipeline.   Next, the team  gets together                                                               
to postulate the  events or scenarios that could  go wrong within                                                               
the areas  of natural  and operational hazards.   Then,  the team                                                               
estimates how likely each of those  scenarios is to occur, and if                                                               
those events were  to occur, what the consequences would  be.  He                                                               
said  that  for Alaska's  project  the  team  is looking  at  the                                                               
consequences in  terms of disruptions  to state  revenue, safety,                                                               
and impacts  to the  environment.  The  probability of  the event                                                               
occurring and the consequence if  it did occur are taken together                                                               
to become  a numerical  value of  the risk.   The team  will then                                                               
provide  a  risk profile  presentation  in  which the  risks  are                                                               
identified in order of significance:  high, moderate, and low.                                                                  
                                                                                                                                
2:20:05 PM                                                                                                                    
                                                                                                                                
MR. ROSEN noted  that the Alaska Risk Assessment  Project was set                                                               
up in  three phases [slide 7].   Phase 1 will  develop the method                                                               
to  be used  in the  assessment  and includes  several months  of                                                               
public  outreach conducted  throughout the  state.   Minutes were                                                               
kept of  those meetings  and are available  on the  project's web                                                               
site and the project's first report which has been published.                                                                   
                                                                                                                                
MR. ROSEN,  in response  to Representative  Wilson, said  most of                                                               
the  public  input  was  broad rather  than  detailed  and  often                                                               
involved  questions about  what  was to  be  included within  the                                                               
scope of the project.  For  example, one question was whether oil                                                               
tankers were included and the answer to  that is no.  He said the                                                               
biggest  areas   of  concern  identified  by   the  public  were:                                                               
releases to waterways, impacts to  subsistence, and public safety                                                               
issues as  well as industry  employee safety.  The  broad purpose                                                               
of the  public outreach  was to ensure  that the  method employed                                                               
addresses the concerns of the public, he added.                                                                                 
                                                                                                                                
MR. ROSEN  said the  project's scope of  work includes  the North                                                               
Slope/Valdez  oil  corridor as  well  as  Cook Inlet  [slide  8].                                                               
Specifically excluded from the scope  are refineries and anything                                                               
downstream of refineries,  oil tankers, and acts  of terrorism or                                                               
deliberate sabotage.  He stated that  the area of risk most often                                                               
identified by the public was impact to waterways [slide 9].                                                                     
                                                                                                                                
2:24:04 PM                                                                                                                    
                                                                                                                                
MR. ROSEN  reiterated that Phase  1 of  the project [June  2008 -                                                               
August 2009]  focused on public  outreach and development  of the                                                               
methodology  design for  conducting  the  risk assessment  [slide                                                               
10].   "In  particular,  a lot  of this  involved  a very  clear,                                                               
specific  definition of  what is  an unacceptable  consequence or                                                               
what  is a  significant  risk in  each of  the  areas," he  said.                                                               
Phase 2 will consist of the  major data collection [August 2009 -                                                               
February  2010], such  as looking  at detailed  information about                                                               
the  facilities,  previous   risk  assessment  studies,  business                                                               
practices,   spill   and   corrosion   reports,   and   operating                                                               
procedures.   All  of that  information  will be  applied to  the                                                               
methodology,  or  model,  that  is   created  for  the  areas  of                                                               
operational and  natural hazards, he explained.   The information                                                               
about studies, reports,  and existing conditions will  be used to                                                               
refine the  likelihood or  probability estimates  as well  as the                                                               
consequence  factors.   For  example,  in  comparing two  similar                                                               
pipelines, the consequences  of a spill are likely  to be greater                                                               
for  a  pipeline  with  no  automated  detection  system  and  no                                                               
inspection  as  compared to  a  pipeline  instrumented with  leak                                                               
detection and frequent  inspection.  Phase 3,  he continued, will                                                               
be the  analysis and presentation  of the information in  a final                                                               
report [February 2010 - May 2010].                                                                                              
                                                                                                                                
MR.  ROSEN,  in response  to  Co-Chair  Johnson, noted  that  two                                                               
reports  have already  been produced  and the  next phase  is the                                                               
release of a  report for public comment to  determine whether the                                                               
methodology has  addressed the public's  concerns.  Based  on the                                                               
public comment,  the methodology will  be finalized in  June 2009                                                               
and the methodology design released  in another report.  The next                                                               
deliverable will then be the final report.                                                                                      
                                                                                                                                
2:27:32 PM                                                                                                                    
                                                                                                                                
MR. ROSEN commenced his presentation,  noting that the project is                                                               
now  midway through  Phase 1  [slide 11]  and the  interim report                                                               
summarizing   the   public   participation   and   defining   the                                                               
unacceptable consequences  has been  released.  The  draft design                                                               
methodology  report was  just released,  he said,  and both  this                                                               
report and the interim report  are available on the project's web                                                               
site [slide 12].                                                                                                                
                                                                                                                                
MR. ROSEN explained  that the draft methodology  report kicks off                                                               
the  second public  process  and public  hearings  will again  be                                                               
conducted across  the state over  the next  few months.   He said                                                               
that in addition to the  public process, the state has contracted                                                               
with the  National Academy of  Science for a  totally independent                                                               
peer review.   The  academy has convened  a committee  of experts                                                               
and will be conducting its own  public process in the state.  The                                                               
risk  assessment team  will rely  on the  academy to  confirm the                                                               
technical  correctness  of  the  methodology,  he  related.    In                                                               
response to Co-Chair  Johnson, he said the cost  of the academy's                                                               
review  is about  $200,000.   The academy  is a  quasi-government                                                               
association, he  said, and most of  the actual work is  done on a                                                               
volunteer basis  from the  committee of experts,  so much  of the                                                               
funding is for travel and expenses related to the review.                                                                       
                                                                                                                                
2:31:25 PM                                                                                                                    
                                                                                                                                
MR.  ROSEN concluded  his presentation  by  reiterating that  the                                                               
final report  is due the  summer of 2010  [slide 13] and  that it                                                               
will  be a  large  summary  of the  hundreds  of event  scenarios                                                               
categorized  in  the  areas  of   reliability,  safety,  and  the                                                               
environment.   He said the  highest risks will be  identified for                                                               
potential mitigation and the  potential recommendations depend on                                                               
the  nature  of  the risk  [slide  14].    If  it is  a  physical                                                               
component of  the infrastructure, a potential  recommendation may                                                               
be  replacement  or  repair.     Potential  changes  to  business                                                               
practices or  internal company policies  will also be  looked at.                                                               
If industry  does not respond  in this  regard, then a  next step                                                               
might include changes to management or changes to regulation.                                                                   
                                                                                                                                
CO-CHAIR  JOHNSON said  it is  important to  keep an  eye on  the                                                               
state's resources because they are the state's livelihood.                                                                      
                                                                                                                                
CO-CHAIR NEUMAN  added that any  major disruption in  Prudhoe Bay                                                               
operations  would  be devastating  to  the  state revenue  stream                                                               
because 85  percent of  the state's revenue  is coming  from this                                                               
one place.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  GUTTENBERG   observed  that   the  state   has  a                                                               
contractual  relationship  with the  producers  as  much as  each                                                               
producer has with  the other producers.   One consideration still                                                               
floating around is  what the contractual obligation  might be for                                                               
one of the non-operating owners when  one of the other owners has                                                               
a negligence accident.                                                                                                          
                                                                                                                                
CO-CHAIR JOHNSON pointed  out that one thing not  talked about is                                                               
what happens  if an event  is not the  fault of the  producers or                                                               
the state, such  as an act of terrorism,  earthquake, or volcano.                                                               
He surmised that these things may show up in the gap analysis.                                                                  
                                                                                                                                
2:35:10 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Resources Standing Committee meeting was adjourned at 2:35 p.m.                                                                 

Document Name Date/Time Subjects
Risk Assessment Presentation.pdf HRES 3/27/2009 1:00:00 PM
PSIO Update .pdf HRES 3/27/2009 1:00:00 PM