Legislature(2015 - 2016)BARNES 124
02/04/2015 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| Overview(s): Department of Natural Resources, Division of Mining, Land and Water | |
| Department of Natural Resources, Division of Geological & Geophysical Surveys | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
February 4, 2015
1:04 p.m.
MEMBERS PRESENT
Representative Benjamin Nageak, Co-Chair
Representative David Talerico, Co-Chair
Representative Mike Hawker, Vice Chair
Representative Bob Herron
Representative Kurt Olson
Representative Paul Seaton
Representative Andy Josephson
Representative Geran Tarr
MEMBERS ABSENT
Representative Craig Johnson
COMMITTEE CALENDAR
OVERVIEW(S):
DEPARTMENT OF NATURAL RESOURCES, DIVISION OF MINING, LAND AND
WATER
- HEARD
DEPARTMENT OF NATURAL RESOURCES, DIVISION OF GEOLOGICAL &
GEOPHYSICAL SURVEYS
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
BRENT GOODRUM, Director
Division of Mining, Land and Water (DMLW)
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: Provided a PowerPoint overview of the
Division of Mining, Land and Water.
EDMUND FOGELS, Deputy Commissioner
Office of the Commissioner
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the PowerPoint
overview of the Division of Mining, Land and Water.
STEVEN MASTERMAN CPG, State Geologist, Director
Division of Geological & Geophysical Surveys (DGGS)
Department of Natural Resources (DNR)
Fairbanks, Alaska
POSITION STATEMENT: Provided a PowerPoint overview of the
Division of Geological & Geophysical Surveys.
MARK MYERS, Commissioner
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the PowerPoint
overview of the Division of Geological & Geophysical Surveys.
EDMUND FOGELS, Deputy Commissioner
Office of the Commissioner
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the PowerPoint
overview of the Division of Geological & Geophysical Surveys.
ACTION NARRATIVE
1:04:04 PM
CO-CHAIR DAVID TALERICO called the House Resources Standing
Committee meeting to order at 1:04 p.m. Representatives Olson,
Seaton, Josephson, Hawker, Nageak, and Talerico were present at
the call to order. Representatives Herron and Tarr arrived as
the meeting was in progress.
^OVERVIEW(S): Department of Natural Resources, Division of
Mining, Land and Water
OVERVIEW(S):
Department of Natural Resources, Division of Mining, Land and
Water
1:05:18 PM
CO-CHAIR TALERICO announced that the first order of business is
an overview of the Department of Natural Resources, Division of
Mining, Land and Water.
1:05:53 PM
BRENT GOODRUM, Director, Division of Mining, Land and Water
(DMLW), Department of Natural Resources (DNR), began his
PowerPoint overview of his division by noting that he has been
the division director since May 2011. Prior to that he served
20 years in the U.S. Marine Corps and received a Bachelor of
Science degree from the Naval Academy and a Master's degree in
Operations Research from the Naval Postgraduate School.
CO-CHAIR TALERICO offered his appreciation for Mr. Goodrum's
military service.
1:07:14 PM
MR. GOODRUM said the division's mission [slide 2] is to provide
for the appropriate use and management of Alaska's state-owned
land and water, aiming toward maximum use consistent with the
public interest. He said DNR is principally about land
management and land stewardship, and managing the state's
resources is not just for this generation but all future
generations. A transparent process and public participation are
needed and the statutes and regulations reflect that. Moving
forward the division will continue to emphasize the need and
requirement for good science and good data to make good
decisions because, ultimately, those are the decisions that are
upheld over time. He noted that [DNR] manages approximately 100
million acres of uplands and about 60 million acres of shore
lands, tidelands, and submerged lands. Alaska has 40,000 miles
of coastline, more than the rest of the U.S. combined, and more
than 3 million lakes. The skill sets and expertise within the
division are diverse, which is important for solving complex
land management issues.
1:09:54 PM
MR. GOODRUM highlighted the division's core services [slide 3].
Addressing the core service of acquiring land, he said the state
has to date received about 100 million acres of the over 105
million acres to which it is entitled. The division must make
good decisions with the remaining lands it brings into state
ownership, he noted. Sometimes land is gifted to the state and
sometimes land conservation easements come in through the Exxon
Valdez oil spill (EVOS). The Realty Services Section holds
title to all of that land for the state and manages those
easements as well. It is important that the division defend and
assert state ownership issues. When the state owns land, both
surface and subsurface rights are associated with those lands
and it is the division's responsibility to do a good job
managing those. Through its Public Access Assertion and Defense
Unit the division defends access to state land and waters. The
division closely tracks historic trails, known as R.S. 2477s, as
they are legal access throughout the state. Under 17(b) of the
Alaska Native Claims Settlement Act, easements go across private
lands to ensure access to other state lands; it is a federal
government responsibility and the division ensures that the
federal government appropriately annotates those. The division
also closely follows public trust doctrine and equal footing
issues. Under AS 38.04.065, the division creates area plans to
direct management of state lands. These are high level plans
that encompass generally millions of acres at a time. The plans
look at management intent, the resources available in that area,
and make 20-year forecasts for what the state foresees could
take place in an area. The principles of multiple-use and
sustained yield are used and observed in that planning process.
1:12:34 PM
MR. GOODRUM continued highlighting the division's core services,
pointing out that the division sells and transfers land into
private ownership and completes municipal entitlement. When
formed, municipalities are entitled to a certain amount of land
based upon a calculation. Through an iterative process those
entities request certain lands and then the division evaluates
those and transfers those lands to the municipalities for their
ownership and economic benefit. The division issues short-term
and long-term authorizations for the use of state land. This is
critical and is the bread and butter of what the division does.
The division provides regulatory oversight for a number of
different functions, including water use throughout the state
and dam safety. However, when there is some type of power
generation involved with a dam, the federal government generally
has jurisdiction through the Federal Energy Regulatory
Commission (FERC). The division also does the platting for the
unorganized boroughs throughout the state, and it oversees the
state's program for coal exploration and development and is
responsible for mine reclamation. Additionally, the division
collects revenues for the use and disposal of state land. The
Lands Sales and Contract Administration Section collects about
$5 million annually from sales, which then goes back into the
land disposal income fund which pays for that ability. Alaska's
constitution provides that land shall be made available for
settlement and development. The Mining Section oversees the 3.7
million acres of mining claims within the state. About 21,000
acres are in lease and there are about 26,000 acres of offshore
lease. The majority of offshore lease, about 23,500 acres,
occurred in 2011 near Nome. About 42,000 state mining claims
exist within the state. Through various royalties and taxes in
2013 the state received over $94 million from the mining
industry. Lastly, the division provides active stewardship of
state land and water, which is the division's biggest
responsibility and something that it takes very seriously. Mr.
Goodrum noted that the division's mission results, listed on
slide 4, flow from its core services. He said he will not be
discussing these results today because they can be found on the
Office of Management & Budget (OMG) web page.
1:16:08 PM
MR. GOODRUM outlined the anatomy of a large scale development
project. Drawing attention to slide 5, he said the picture is
of Golden Valley Electric Association's Eva Creek Wind Project
north of Healy. The division's northern region in Fairbanks
oversaw the permitting of this project and is continuing with
the follow-up. He described the five types of authorization
that all large projects require: leases, easements, permits,
material sales, and water authorizations. Generally, all large
projects require a long-term lease in order to get the financial
backing for the project. Many times easements are needed to get
access to those lands. Permits are often needed for short-term
authorizations to make things happen in a timely manner.
Material sales, such as sand and gravel, are critical to any
project. Also, some sort of water authorization is necessary,
such as a temporary water use for a short time period or a water
right for the continued use of water for the project.
MR. GOODRUM turned to slides 6-7, pointing out that between 2006
and 2011 the number of [requests] for these five types of
authorizations was ever increasing. The administration and
administration recognized that this issue needed to be resolved
and took action. This ever-increasing permit backlog introduced
uncertainty and had a chilling effect on investment within the
state, so a number of things were done. In 2011 the department
put together a comprehensive multi-facetted plan for how to
address the permit backlog and make Alaska a better investment
location with certainty, timeliness, and effectiveness in its
permitting process. The focus was primarily on people, process,
and statutory and regulatory packages. When he came onboard at
the end of fiscal year (FY) 2011, the division was required to
keep 26 positions vacant due to lack of funding. The effort
added some staff and increased some of the general fund that was
necessary to start moving this permit situation in a more proper
direction. The process was looked at for how to make it better
and a number of statutory and regulatory efforts are underway.
Changes affecting leasing and material sales have significantly
made these processes go more smoothly and timely for applicants.
Displaying slide 8, Mr. Goodrum noted that on December 31, 2014,
the backlog stood at 1,035 authorizations. Since the start of
FY 2012 the backlog has been reduced by 1,623, a reduction of
61.1 percent. The division continues to make strong process to
reach where it wants to be. He stressed it is important to be
able to attract the right people, train them, and retain them so
that the division has people with the right skill sets for
making those challenging decisions and, he added, the chart on
slide 8 is indicative of their great work.
1:21:19 PM
MR. GOODRUM moved to slide 9, stating that process is the other
thing besides people, and the primary tool in improving the
division's process is the Unified Permit Program. This program
is an umbrella of various different capabilities that increase
or create permit efficiencies. The division began with IBM's
business process management system, which moved the division to
an electronic case-file system. Prior to this system, only the
person holding the physical hard copy of a particular case could
adjudicate it, or see where something was at, or update the
information. The division is also using a Continuous Process
Improvement Model to look at how to make things effective and
more efficient. This is really helping shape the culture of the
division for how to be more innovative and to better meet the
needs of constituents and applicants. Through the Content
Management System the division has been able to scan various
documents and have things more available electronically, as well
as more available to the public. Geographic information system
(GIS) improvements and information technology (IT) improvements
have also been critical in improving this system and moving the
division forward. Thus far the division has built out the land
use permit system and phase I of water rights. The intent is to
aggressively finish aspects of the division's water rights
program and then move into easements and material sales.
1:23:16 PM
MR. GOODRUM said the primary goals of the Unified Permit Program
[slide 10] are to shorten and make more consistent the times and
process for authorizations. The division is building internal
systems that support and improve its productivity. The division
is looking at how to have better transparency internally as well
as externally for applicants and the public. The goal is that
ultimately an applicant will have the ability to see and
understand where an application is at and what the final hurdles
are for getting a decision. Turning to slide 11, he spoke to
the guiding principles of the Unified Permit Program, saying the
first principle is to meet statutory and regulatory frameworks
or requirements. The system needs to be agile and able to adopt
changes made in statute or regulation, and the product selected
by the division allows that to be done. It takes a significant
amount of work to put this together, but the division is
confident there will be even greater returns as this effort is
advanced forward. He said a number of supporting sections
within the division work closely together on the things that go
into decisions. Whether it is easements, leases, disposals of
land, or something else, all those parts must work together. He
expressed his confidence in where things are headed and said
progress is being made in the right direction.
1:26:04 PM
CO-CHAIR TALERICO inquired whether 17(b) easements directly deal
only with the Bureau of Land Management (BLM).
MR. GOODRUM confirmed it is exclusively a BLM-managed program.
The BLM is the agency that initially indicates where a 17(b)
access would cross private lands to ensure access for the state
to other lands or to navigable waters.
1:26:53 PM
MR. GOODRUM turned to slide 12 and provided a disclaimer prior
to his update on where the state is at regarding the Arctic
National Wildlife Refuge (ANWR) boundary dispute. The onshore
boundary dispute involves land selections in an administrative
process, he explained. There are some legal questions about the
Alaska National Interest Lands Conservation Act (ANILCA) and the
Statehood Compact. The issue is being handled by the Department
of Law, Natural Resources Section. The Division of Mining, Land
and Water manages the onshore selections process and is
advancing that. By advancing, he means that in October [2014]
the division sent a letter to BLM asking for priority conveyance
of the approximately 20,000 acres that lie between the Staines
and Canning rivers. The BLM has requested some files that have
been archived somewhere that would give more information. The
offshore piece involves some different legal claims and is being
handled by the Department of Law and the Division of Oil & Gas.
The Division of Oil & Gas manages those offshore leases and
offshore leases were issued this year that abut the Arctic
National Wildlife Refuge boundary.
1:29:01 PM
MR. GOODRUM explained that in 2011 the Division of Oil & Gas
held an offshore lease in the area adjacent to the Arctic
National Wildlife Refuge and there was a successful bidder on
some of those leases. The Division of Mining, Land and Water's
Survey Section works closely with other divisions within the
department. The Survey Section was asked to work closely with
the Division of Oil & Gas in defining where is this legal
boundary in which this lease is going to be issued. The Survey
Section chief brought this particular topic to his attention.
Mr. Gerald Jennings was in the Survey Section in 2003 when this
similar issue appeared between the state, the Fish and Wildlife
Service, and BLM. Correspondence indicates that the uncertainty
about this boundary issue was quite well known between the state
and these other federal agencies. The Fish and Wildlife Service
recommended a joint inspection of the area in 2003 and Mr.
Jennings participated in that. There were two separate
inspections. The first inspection was led by the Department of
Interior (DOI) who had a BLM riparian specialist as well as the
chief of survey from the Fish and Wildlife Service, and the
State of Alaska's Survey Section chief. Immediately after that
the state led a three-day inspection of the area in which Mr.
Jennings participated, along with an expert contracted by the
state, and the Fish and Wildlife Service's chief of survey.
1:31:09 PM
MR. GOODRUM said the state generated a report, known as the
Simpson Report, on its findings within the boundary issue, which
was provided to both BLM and the Fish and Wildlife Service.
Neither federal agency generated any report back to the state.
The state corresponded with those federal agencies asking for
copies of their report, but nothing was ever generated and the
issue essentially went cold. After the lease sale in 2011 the
division looked more closely at this issue with the Department
of Law and the Division of Oil & Gas. In July 2014 the state
went back out to reconfirm its findings of 2003 and what it had
independently submitted. Through the Department of Law a couple
of experts were contracted, including Mr. Jennings. Mr. Goodrum
said he also personally participated. That effort led the
division to firmly believe that the state's findings in 2003
were correct. The division has had exchanges with both of the
federal agencies and is looking for resolution.
1:32:44 PM
MR. GOODRUM said slide 13 depicts the original 1957 application
for the proposed Arctic Wildlife Range. This is important, he
explained, because the [No.] 84 original decision by the U.S.
Supreme Court in United States v. Alaska ruled that public land
order (PLO) 2214, the application for the range, controlled
where the boundary was and this is the map that accompanied the
PLO 2214 application. The Fish and Wildlife Service created a
new map in 1980, slide 14, which maybe had a slightly different
boundary. He compared the two maps by drawing attention to
slide 15, noting that the map from the 1957 original application
is on the right and the 1980 map from the Fish and Wildlife
Service is on the right. He pointed out that on the 1957
application map the line bends to the right just as the Canning
River does, and the Staines River is indicated further to the
west; on the Fish and Wildlife Service map the assertion is the
Staines River. He said a map in the briefing packet [also seen
on slide 16] delineates in yellow the area of disagreement on
whether those uplands were ever intended to actually be included
within the Arctic National Wildlife Refuge boundary. In an
article written after release of the [October 2014] briefing
packet, the Fish and Wildlife Service indicated it didn't have
any comment. But, he argued, it did make a comment - saying its
position is that the boundary of the refuge has been consistent
since the Arctic Wildlife Range was formed in the 1950s. The
differences in the maps, he continued, indicate that perhaps
there has been a change.
1:35:41 PM
MR. GOODRUM, responding to Co-Chair Nageak, confirmed the yellow
area [in slide 16] is the uplands currently in disagreement. He
said the state has asked for conveyance to bring this federal
land into state ownership. The state is working with the BLM
through an administrative process in which the state is
asserting there is nothing between its top filed selection that
hovers over that land in any sort of a withdrawal that would
prevent it from attaching and the state then having a legitimate
claim to bring that land into ownership.
CO-CHAIR NAGEAK asked whether the legislature can assist in the
process or whether things must first be done administratively.
MR. GOODRUM replied he doesn't know that administratively
anything can currently be done by the legislature that would
hasten BLM to decide to convey land to the state that the state
has a legitimate right to. He said he will get back to the
committee if he finds otherwise, but right now it is the
administrative process that is before the state, consistent with
how the state brings other lands into ownership. The importance
of these lands is clearly understood by the division, as with
all of the state's land selections.
1:37:40 PM
MR. GOODRUM, responding to Co-Chair Talerico, confirmed that the
land being discussed is approximately 20,000 acres of uplands,
and approximately 3,000 acres offshore are affected by where
this boundary ultimately is.
MR. GOODRUM concluded his presentation by noting that the state
has yet to receive any official response from either federal
agency on this particular issue, not even a counter claim that
says the state is wrong in its assertion. There is not a single
Alaskan in this room, he said, that doesn't believe the state is
entitled to its full entitlement. Well-defined, recognizable
borders are critical to having good neighbors. This particular
boundary issue has been around for a while. He added that he
thinks all parties realize it isn't fully resolved and said the
division intends to work closely with the other federal agencies
to bring some closure to this very important issue to the state.
CO-CHAIR TALERICO concurred, saying it is more than a minor
inconvenience because of the land's location. He offered his
appreciation for the effort that has been put forward to get
this issue resolved.
1:39:44 PM
REPRESENTATIVE JOSEPHSON inquired as to how much of the [100]
million acres of state-held land has yet to be classified; for
example, classified as habitat or mining. He further inquired
whether there are circumstances where the need to do that is
delayed because the land is so removed, or there is no interest
in development, or no nearby communities.
MR. GOODRUM answered he will get back to the committee with an
exact number, but said the majority of state-owned lands are
within some sort of classification or area plan. There are
remote parts of Alaska for which there are not yet area plans.
The division is currently working on a North Slope Management
Plan, which is a bit of a hybrid between an area plan and a
step-down management plan, and includes areas that have not
previously had a plan in place. The division is well aware that
it needs to get a plan in place for those areas.
1:41:14 PM
REPRESENTATIVE SEATON brought attention to slide 3 and the core
service of creating plans to direct management of state land and
water. He offered his belief that those plans are separate from
the plans for legislatively designated special areas being
worked on by the Division of Habitat. He asked whether DNR has
provided or will be providing input into those plans and whether
there is much cooperation in the development of those plans.
MR. GOODRUM replied that the division works closely with the
Alaska Department of Fish & Game (ADF&G) on plans, particularly
critical habitat areas. He said DNR manages the land and
[ADF&G] manages the habitat and creatures, and the division has
a good working relationship with ADF&G. Over the last year, he
related, there was concern about the process, particularly with
the critical habitat areas, but he thinks some of that will
change in this current administration as far as how that process
will continue to evolve. He added that DNR will continue to
work closely with ADF&G on those plans in probably a much more
open and transparent process.
REPRESENTATIVE SEATON remarked that Mr. Goodrum is getting to
the crux of the idea and that he heard what he was hoping to
hear. He said he wants to ensure that DNR is going to have
input into those plans and that it will be an open process
involving the people of the local area.
MR. GOODRUM responded that DNR will absolutely be at the table
and wants to be involved in an open public process for the
management of state lands and resources, and is looking to make
good decisions for the long term.
1:44:21 PM
REPRESENTATIVE JOSEPHSON posed a scenario in which the division,
in conjunction with ADF&G, finds a thriving fishery. But, in
that same location there is potential for a great and profitable
mine that would help communities. He asked how DNR would
resolve that kind of decision. He further asked whether there
is a statute that dictates that. He noted that this issue has
come up and is an issue that will keep coming up.
MR. GOODRUM answered that those are some of the tough decisions
as various equities are balanced. It also gets to the nexus of
inter-departmental coordination, he said, which gets a bit over
his head. A couple of his bosses, present in the audience, can
speak to the spirit and intent and how that actually will
function going forward. Those processes obviously need to be a
public process. A good decision cannot be made without public
involvement and good scientific data. The department works
closely with ADF&G and others to have the best data to make the
best decisions to go forward in a public environment that allows
for participation. Those are all critical elements with what
DNR is tasked to do and that is why it is important for the
department to retain good quality employees within the state.
1:46:41 PM
REPRESENTATIVE SEATON recalled that one of the elements within
the ADF&G transition plans was to request or implement automatic
water reservations for fisheries. He inquired how that idea
works into the planning process; for example, whether DNR feels
that is already there because of constitutional mandates or
whether there is a planning process with ADF&G.
MR. GOODRUM replied that the concept of whether the state could
look at some sort of automatic reservation of water has come up
a number of times. He offered his belief that, to date, there
has generally been more obstacles or more concerns about how
those decisions would be based because water rights are an
actual right. He said he has not had the opportunity to talk to
Commissioner Myers about the issue, but that it will obviously
be part of a discussion going forward as to what are the pros
and cons and how to base that on good science; for example, what
sort of data can those decisions be made on. The nexus between
ADF&G and DNR for the management of those resources and how to
come to good decisions are worthy discussions that need to be
had. Given it was one of the transition team's recommendations,
he said he anticipates that this administration will look at its
feasibility and whether it is a good idea.
1:48:59 PM
REPRESENTATIVE SEATON appreciated Mr. Goodrum's response and
said he hopes it is done with public involvement. He noted that
coordination is also needed on aquatic invasive species plans.
Given the current budget constraints, he asked whether Mr.
Goodrum sees that this coordination and preplanning can still go
forward in order to protect the state's resources.
MR. GOODRUM deferred to Deputy Commissioner Ed Fogels.
EDMUND FOGELS, Deputy Commissioner, Office of the Commissioner,
Department of Natural Resources (DNR), responded that the
responsibility for invasive species falls under the purview of
the Division of Agriculture, which still has an invasive species
program. People in that division are developing invasive
species strategic plans for the state. Under a memorandum of
understanding (MOU) developed with ADF&G, marine aquatic
invasives will be coordinated by ADF&G, and freshwater aquatic
invasives will be coordinated by DNR. The main focus of late
has been on Elodea and figuring out how to get a handle on that
particular invasive. Last year the Division of Agriculture
director issued a quarantine so pet shops cannot sell Elodea.
Last summer herbicides were tried in Kenai Peninsula lakes and
it appears they worked quite well. It is now a matter of
deciding whether to use those herbicides in other lakes that are
infested. It is going to be an issue of resources and funding
because it costs a lot of money to treat a lake. The department
has a plan, so if the money is there it can go in; but more
important is the buy-in from homeowners in a residential
development around a lake.
1:52:36 PM
REPRESENTATIVE SEATON understood that through the MOU there is
preplanning, permit availabilities, and streamlining so that
when there is an incipient population, DNR, ADF&G, and DEC are
not waiting on backlogs for permits.
MR. FOGELS corrected his earlier statement, saying that the MOU
is between DNR, ADF&G, and DEC; DEC is part of the MOU so DNR
can work with them. Now that these herbicides have been tested
in lakes on the Kenai Peninsula, they are permitted there by
DEC, and DNR is looking for ways to ensure that permitting for
herbicide use can go quickly. He said he thinks it will be
driven by the public and homeowner buy-in to the idea of having
that treatment done to their lake. He said DNR wants to ensure
this can be done quickly so that when an infestation is found
DEC can rapidly outreach to the community and, if the homeowners
are comfortable, the permits can be issued and - if there is
funding - treatment can be done as soon as possible to prevent
further spread.
REPRESENTATIVE OLSON thanked Mr. Fogels for DNR's work last year
on Elodea. He recalled that there was an outbreak on the Kenai
Peninsula and a bill was dropped in. Within three days Mr.
Fogels came to the legislature saying that he could do it by
regulation. An executive order (EO) was issued, shutting down
the immediate sources of the outbreak, which was pet shops. The
legislature could not have done it that fast.
The committee took an at-ease from 1:54 p.m. to 2:03 p.m.
^Department of Natural Resources, Division of Geological &
Geophysical Surveys
Department of Natural Resources, Division of Geological &
Geophysical Surveys
2:03:11 PM
CO-CHAIR TALERICO announced that the next order of business is
an overview by the Department of Natural Resources, Division of
Geological & Geophysical Surveys.
2:03:26 PM
STEVEN MASTERMAN CPG, State Geologist, Director, Division of
Geological & Geophysical Surveys (DGGS), Department of Natural
Resources (DNR), began his PowerPoint overview of the Division
of Geological & Geophysical Surveys (DGGS) by turning to slide 2
and noting that the division's mission is to evaluate state
lands for their potential to host energy, resources, and mineral
resources primarily; to look at location and supplies of
groundwater and construction materials; and to evaluate
geological hazards around the state. To do this, the division
has divided its staff into sections.
MR. MASTERMAN explained how the division views this mission
[slide 3]. He said the division views its role as providing
geoscience information to foster mineral and energy development
around the state. This is critical because it produces many
rural jobs as well as revenue to the state. The division
provides information that helps to reduce the cost of
construction around the state, especially in rural communities.
The division provides information to reduce the risk from the
state's many geologic hazards, such as volcanoes, earthquakes,
permafrost, flooding, and landslides. The division provides
information to help businesses, communities, and Alaskans build
and accommodate those features in their designs. Another role
is to make the public aware of all the geologic information that
is available, most all of which is available on the division's
web site. The division manages the state's collection of
geologic materials [through its Geologic Materials Center,
currently housed in Eagle River but soon to be relocated to
Anchorage. He said this collection is incredibly valuable for
the potential for future explorers to find energy and mineral
resources based on the samples held in that repository.
2:05:49 PM
MR. MASTERMAN outlined the division's six sections [slide 4],
noting the division has 42 permanent staff. He said the Energy
Resources Section evaluates state lands for energy resources.
The Mineral Resources Section evaluates state lands for mineral
resources. The Engineering Geology Section deals with
engineering geology, geological hazards, fault-related hazards,
tsunamis, landslide, and permafrost-related issues. The
Volcanology Section cooperates with the U.S. Geological Survey
(USGS) and the Geophysical Institute [at the University of
Alaska Fairbanks] to form the Alaska Volcano Observatory. The
observatory's mission is to monitor and report on volcanic
activity around the state. The Geologic Communications Section
manages all of the division's data, publishes all of the
division's reports, and makes all of that information available
to the public via the division's web site. The last section is
the [aforementioned] Geologic Materials Center.
MR. MASTERMAN said the Energy Section's full-time staff of seven
people are focused primarily on the major energy basins on the
North Slope and in Cook Inlet [slide 5]. He explained that the
green boxes on the map of Alaska are called the "frontier
basins" and the red ovals are the Susitna and Nenana basins
where work is also being conducted. He pointed out that, based
on the section's work, the discovery of a single 100 million
barrel field would return about $3.5 billion in revenue to the
state over the life of the field at a price of $100 per barrel.
2:08:22 PM
MR. MASTERMAN reviewed Alaska's hydrocarbon resources [slide 6],
relating that according to USGS estimates the North Slope has
about 40 billion barrels of undiscovered technically recoverable
conventional oil resources. To date about 17 billion barrels of
oil have been produced. The USGS further estimates that the
North Slope has over 200 trillion cubic feet of undiscovered
natural gas in conventional reservoirs. There are also tens of
billions of barrels of oil in unconventional and in heavy oil,
as well as hundreds of trillions of cubic feet of natural gas in
unconventional types of formations like shale gas, tight gas,
gas hydrates, and coalbed methane. The amount of hydrocarbons
on the North Slope is therefore staggering with a lot yet to be
discovered. Likewise, he continued, in Cook Inlet the USGS
estimates that there is 19 trillion cubic feet of undiscovered
technically recoverable natural gas. To date about 8 trillion
cubic feet have been produced. He further noted that Alaska is
quite underexplored in relation to the Lower 48 states. For
example, the North Slope has 600 exploration wells as compared
to 19,000 in Wyoming, and the North Slope and Wyoming are close
to the same size. He said he thinks that if the North Slope was
to get to Wyoming's level of drilling a lot of these resources
would be discovered and produced.
2:10:29 PM
MR. MASTERMAN discussed the division's North Slope objectives
[slide 7], saying one objective is to stimulate exploration
because discoveries will help to fill the Trans-Alaska Pipeline
System and drive state revenues. Therefore the division is
completing geologic mapping on the North Slope and doing work on
conventional and unconventional plays. Detailed stratigraphic
work is being done to try to understand how the formations were
laid down and how they have evolved over time - understanding
the geology is what leads to discovery. By providing this
publically available geological information to everybody the
division hopes to be able to drive that discovery. Right now
the focus is on oil on the North Slope because, until there is a
gasline and gas reserves are looking in short supply, there is
not much reason for the division to spend much time working on
gas on the North Slope.
MR. MASTERMAN described recent North Slope projects [slide 8].
One project, he said, was the publishing of some geologic maps
and cross sections around the North Slope. The division is
currently working on producing a couple more North Slope
geologic maps. The division is also working in conjunction with
the university on a project for shale oil in the Shublik
Formation and in the Hue Shale. Planned work on the North Slope
includes the Stimulating Exploration initiative. A very
successful lease sale was held by the Division of Oil & Gas last
fall. It was the third best lease sale in the history of the
North Slope, indicating there is still a lot of interest in the
North Slope and the state has an opportunity right now to
stimulate exploration up there and bring more players in and
help them be more successful. The division is also working to
complete geologic mapping in the Foothills area and looking at
less conventional resources like tight formations and heavier
oils. Mr. Masterman displayed slide 9, saying that these are
the areas on the North Slope that his division would like to
map. The area yet to map on the North Slope is huge and it will
take roughly 12 years to complete the mapping.
2:13:31 PM
MR. MASTERMAN drew attention to slide 10, stating the division's
focus in Cook Inlet is to ensure a stable gas supply. A few
years ago, he recalled, the conversation was about how Cook
Inlet was running out of gas, there were going to be brownouts,
and utilities were concerned there would not be enough gas for
electrical generation of home heating. Through a variety of
initiatives, one which was the publishing and making available
of additional geological information, DNR was able to encourage
exploration and development in the Cook Inlet. Now there is a
pretty stable gas supply, so the initiative was very successful.
ConocoPhillips recently restarted its liquefied natural gas
(LNG) plant and Agrium is looking at restarting its fertilizer
plant. Now that there is more gas known in Cook Inlet and more
reserves, industry is responding by looking at utilizing that
gas. The Donlin Mine is looking at constructing a gasline from
Cook Inlet to its project on the Kuskokwim River, which would
consume a substantial amount of gas. There is also the
possibility that Cook Inlet gas would be brought up to Fairbanks
instead of bringing it down from the North Slope. These things
will place increased demand on the Cook Inlet Basin, so it will
be important for the division to maintain the supply of
information to the explorers so that they can continue to be
successful and keep that gas. Until there is a gasline from the
North Slope, pretty much "all the gas eggs will be in one
basket". Regarding oil in the Cook Inlet, said the division is
looking at the potential for alternative types of plays and
unconventional plays. In the basin there is the possibility for
some structural plays. The division is also looking at the
timing of oil formation in the basin and seeing how that relates
to the consolidation of the rocks because that will tell a lot
about where, or where not, to expect to have oil accumulations.
There is some industry interest in that work, especially in the
structural play. Hilcorp is looking at that itself on the west
side of Cook Inlet.
2:16:12 PM
MR. MASTERMAN turned to slide 11, reporting that the division
recently completed a draft geological map on the west side of
the Iniskin Peninsula. In that work the division discovered two
new oil-stained outcrops, sparking some exploration interest on
that side of the Cook Inlet Basin. The division is currently
finishing that map and finishing the Tyonek map, a previous
project. In summer 2015 the division will again be mapping on
the west side of Cook Inlet between Tuxedni Bay and Chinitna
Bay, the area that has the best exposure of the oil source rocks
for the Cook Inlet. Those units will be looked at closely to
try to understand how the basin evolved and how the oil formed
and migrated out of those rocks. The division would like to
continue its work on the west side of Cook Inlet and migrate
further south going down to the northern Alaska Peninsula. Once
the surface mapping is complete, information needs to be taken
from the subsurface. The surface mapping, the bore holes, and
the seismic data will be combined to start generating a three-
dimensional (3-D) view of the basin so people can understand
more completely its evolution and where the traps may be and
where the source rocks are. He reiterated that the division is
focused on providing information to industry to help industry
with its exploration. He said slide 12 depicts some of the
areas that the division is looking at and mapping in Cook Inlet.
It will take 15 or more years to complete this mapping, and that
is on top of the time in the North Slope.
2:18:25 PM
MR. MASTERMAN brought attention to slide 13, noting the Susitna
Basin can be looked at in some ways as an extension of Cook
Inlet. There is a lot of gas in the Susitna Basin, he said, and
the division is looking at the potential of the coal seams there
to host gas in terms of coalbed methane. Those coal seams are
thick and have been the source of most of the gas in the Cook
Inlet Basin, so there is a good chance that the Susitna coal
seams could host coalbed methane resources.
MR. MASTERMAN said Nenana Basin (slide 14) is more challenging
because it doesn't have a lot of outcrop and is basically a
swamp. The division is therefore looking at the rocks in the
margins and working as closely as possible with Doyon, Limited.
The division is currently funding a graduate student through the
university who has set out a series of seismic stations in the
basin to look at the seismicity. From that the division hopes
to understand the structural evolution of the Nenana Basin and
get a better understanding of where some of the traps might be
for the oil and gas accumulations in that basin.
MR. MASTERMAN addressed local energy use [slide 15], relating
that a couple of years ago the division put out a report
[entitled, "FOSSIL FUEL AND GEOTHERMAL ENERGY SOURCES FOR LOCAL
USE IN ALASKA: Summary of Available Information"]. He
explained that the report breaks the state into a variety of
areas and looks at the potential local energy sources in each of
those areas. He said slide 16 synthesizes the local energy
sources in the report and this synthesis is basically a
guidebook of where to go and what to look for by area throughout
the state. A red box on the chart means it is an identified
resource at, or close to, one or more of the communities. A
green box indicates that further work is warranted because there
may be a potential for resources, and a blue box indicates the
division's view that no further work is warranted at this time.
2:20:38 PM
MR. MASTERMAN moved to slide 17, noting the division does some
work on geothermal energy, as well as coal resources, around the
state. This year the division begins work on an energy database
in which all of the analytical data will be put together for oil
and gas wells for the quality of the reservoirs: porosity,
permeability, thermal evolution, organic content. This will
allow people to readily retrieve any of that information about
any area, which will be a great help to the explorers.
MR. MASTERMAN discussed the question of where the division is
going in a broad sense [slide 18]. He said the division is:
looking at increasing the availability of public geologic data;
focusing on oil on the North Slope and gas in Cook Inlet;
completing mapping of the North Slope and Cook Inlet basins - a
long term goal that will take about 30 years; and integrating
the surface and subsurface data to provide a comprehensive view
of how these basins currently sit.
MR. MASTERMAN turned to slide 19, reiterating that the discovery
of a single 100 million barrel field will return a substantial
amount of funding to the state. He said it will take over 30
years to complete the current projects. Sharing his personal
view, he stressed that this is critical work for the state to do
because oil must be kept flowing through the pipeline in order
to keep state revenues. In his mind, this work is arguably more
critical than the many other things the state does, he said.
2:23:23 PM
MR. MASTERMAN said slide 20 lays out the rationale in regard to
the questions of why the state needs to provide public data and
why does the state not save money by letting industry generate
this data. Right now, he pointed out, large companies are
selling assets to smaller companies and smaller companies do not
have the same deep bench of geologists, geophysicists, and
technical staff found in companies like Shell, ConocoPhillips,
and BP. So, these smaller companies place a greater reliance on
publically available information. Once the state makes this
information public it is public for everybody, and people coming
into the state do not have to spend the money to re-generate
this information for themselves, basically reducing the cost of
exploration and helping remove barriers to exploration. This is
stimulative, he said, and helps bring explorers to the state.
2:24:40 PM
REPRESENTATIVE OLSON inquired whether Alaska is competing
against Newfoundland and Nova Scotia, which have produced 3-D
analyses for their provinces and made it available for free to
any qualified bidder.
MARK MYERS, Commissioner, Department of Natural Resources (DNR),
confirmed that other parts of the world produce explorer and
license packages. They have this ability because either the
government has paid for the seismic or they have a regulatory
structure that allows the seismic data to be released. Under
Alaska statute, seismic data cannot be released publically - it
must be voluntarily released or shot with public money. The
USGS has shot seismic data, a crude grid, and some of that USGS
data is releasable. Occasionally the industry allows the
release of a line or two. The Division of Oil & Gas has access
to that data. The Division of Geological & Geophysical Survey
can only have access under special conditions where there is an
agreement, but the data cannot be released confidentially. So,
[DNR] is really limited in its ability to produce those high
quality products. However, in the last decade the Division of
Geological & Geophysical Survey has made significant advances of
bringing in people that have qualified capacity to look at
seismic data, have worked in the industry, or have worked in
other agencies that are using this high quality data, which has
improved the ability to link the subsurface and the surface
geology. While they are doing it, the dataset they have is
limited and therefore nice 3-D maps cannot be produced like
those that the Division of Oil & Gas produces on a regular basis
and which have to stay confidential.
REPRESENTATIVE OLSON concurred that Nova Scotia is paying for
[the analyses], and said that the cost is built back into the
packets that are purchased so that Nova Scotia recoups the cost.
2:27:09 PM
REPRESENTATIVE JOSEPHSON observed on slide 11 that the geology
of the Bruin Bay fault zone is a current project. He further
observed that Bruin Bay is identified on the map on slide 12.
He said he was in Bruin Bay last August and it looks like the
bay is near McNeil [River State Game Sanctuary and Refuge],
which relates to what he was asking of Mr. Goodrum. He surmised
the mapping is being done to look for potential for oil and gas
or mineral development. He asked whether [the mapping of Bruin
Bay] is so that if there is a find in that area, a debate can be
had with as many facts as possible. He said he is curious about
this issue of competing land uses - the McNeil Sanctuary and how
DNR deals with those things - and inquired as to what is the
plan given this massive sanctuary to the north of Kamishak Bay.
MR. MASTERMAN answered that mapping is being done in these areas
because they are the only areas where the rocks can be seen.
Since the inlet is underwater and surface exposure cannot be
seen, mapping must be done where the rocks can be seen. Mapping
is intended to educate the division and everybody else about the
geology of the petroleum system and of the basin. To get that
understanding the division must look wherever the rocks can be
seen. Most of the area being mapped this coming summer is
inside [Katmai National Park and Preserve]. While the division
is obviously not looking at doing any development there, that
information helps to understand the overall petroleum system.
REPRESENTATIVE OLSON asked whether this includes the area around
Fossil Point, which is behind Chisik Island and inside the park.
MR. MASTERMAN replied that he believes Fossil Point is inside,
or close to, the area the division is mapping.
REPRESENTATIVE OLSON said he is asking because fossils are
falling off those cliffs, so there is some real history there.
MR. MASTERMAN said the division has a good working relationship
with the National Park Service, which has been very cooperative
and easy to work with.
2:30:31 PM
CO-CHAIR NAGEAK inquired whether this is mostly proprietary
information or public information. He further asked whether it
could become proprietary information if someone paid for it.
MR. MASTERMAN responded that most of the division's information
is publically available - all of the division's reports are made
public. Occasionally the division uses proprietary information;
in that circumstance the division uses the information to help
generate its final product, but doesn't release that proprietary
information when it makes its final product public. In further
response, he said he doesn't believe that the division has any
state proprietary information. It would only be information
that was provided to the division by industry that the division
would require to keep confidential for a period of time or for
perpetuity. He further confirmed that most of the information
is publically available.
2:31:43 PM
MR. MASTERMAN brought attention to slide 21, noting that the
Mineral Resources Section, with its permanent staff of six, is
tasked with evaluating state land for the production of metals
and minerals. Over the past 20 years, this section has been
flying airborne geophysical surveys nearly every year. It does
geochemical surveys, which is the sampling of streams and rocks,
and that information is released to the public. This section
does detailed geological mapping, usually in the areas where the
geophysical surveys have been flown. This section also does
mineral deposit investigations and provides this information
through the division's web site. [The Geologic Materials Center
is also under this section.]
MR. MASTERMAN turned to slide 22, stating Alaska is a storehouse
of minerals. He said Alaska has 5 percent of the nation's
mineral production, but 20 percent of its landmass, which
indicates that Alaska should have four times as much mineral
production than it does. The 600 mining companies surveyed for
the 2013 Frasier Institute Survey ranked Alaska first in mineral
potential of the 112 jurisdictions that were ranked. Alaska has
17 percent of the world's coal, 4 percent of the world's copper,
3 percent of the world's lead, [and 8 percent of the world's
gold, 5 percent of the world's zinc, and 2 percent of the
world's silver]. Alaska is currently the nation's largest
producer of zinc and silver and the second largest producer of
lead and gold. Despite having 4 percent of the world's copper,
Alaska currently really doesn't produce any copper. He
maintained that Alaska has a bright future in copper production,
with the Pebble deposit alone having billions of pounds of
copper. He displayed a map of Alaska superimposed over a map of
the Lower 48 (slide 23), reporting that according to the latest
USGS statistics, Alaska is first in per capita mineral
production, but forty-third in per area production. He said
Alaska should have, and will have, a lot more large mines than
it currently does.
2:34:48 PM
CO-CHAIR NAGEAK, regarding mineral production versus potential,
surmised Alaska would overtake or become equal to areas in the
Lower 48 if it were to begin mining.
MR. MASTERMAN answered correct, stating that Alaska ranks fifth
in total mineral production in the nation in terms of dollars
produced. Last year a little over $3 billion in metals was
produced. By having more large mines Alaska would move up and
overtake some of the other states. In further response, he
confirmed that Alaska clearly has this potential to overtake the
other states.
2:35:44 PM
REPRESENTATIVE JOSEPHSON understood that the state's tax share
of the $3 billion in minerals produced was $94 million.
MR. MASTERMAN replied he is unsure of the exact number, but
explained that part of the issue with mineral production is
where the mines are located. There are six large mines in the
state, he said. Red Dog Mine is on NANA Regional Corporation
land, so royalties from that mine go to NANA. Usibelli Coal
Mine, Inc., Fort Knox, and Pogo are on state land, but Fort Knox
is on Mental Health Trust land so those royalties go to the
trust. Greens Creek and Kensington mines in Southeast Alaska
are on federal land, so the state does not receive royalties
from those. Thus, Usibelli and Pogo are the only large mines
that are state land. The state owns 100 million acres, roughly
one-fourth of the land surface in the state. So, all things
being equal, one might think that one-fourth of the mines would
fall on state land.
REPRESENTATIVE JOSEPHSON surmised there is no 90/10 split for
minerals on federal land, like is done for oil and gas.
MR. MASTERMAN deferred to Mr. Fogels.
EDMUND FOGELS, Deputy Commissioner, Office of the Commissioner,
Department of Natural Resources (DNR), confirmed the state does
not receive royalties from the two Southeast Alaska mines on
federal land. He said those mines are significant contributors
to the local economy of the City and Borough of Juneau.
CO-CHAIR NAGEAK commented that federal mining laws must be
honored.
2:38:52 PM
REPRESENTATIVE JOSEPHSON observed the statement on slide 23 that
says, "Alaska should have many more large mines". He said he
hopes the Alaska people get to make that decision. He expressed
his concern about takings, saying that is why he asked about the
classifications. He queried whether the state has opened itself
up to takings arguments - where the state offers a lease that is
accepted, which is a contract, and then the state changes that
by adding new regulations, resulting in a legal claim that the
state has interfered with the economic interest. He asked
whether the cart is getting before the horse, the horse being
the public and public buy-in. Clearly, he said, Alaska could
have more mines, but they come when the people want them and he
thinks that in Fort Knox and Pogo there has been that buy-in and
for Red Dog there has definitely been that buy-in. He said he
hopes that is what the department focuses on.
MR. MASTERMAN [deferred to Mr. Fogels].
MR. FOGELS responded that when the department gets state land,
one of the first things done is to plan for it. An extensive
public planning process is undergone with multiple public
meetings. The other departments and divisions tell DNR what the
resource values are on that state land. The public is then told
what is available on that land and asked how the land should be
classified. More often than not, there are multiple overlaying
classifications - minerals, forestry, and wildlife habitat.
Occasionally, DNR finds land so valuable for fisheries or
wildlife habitat that it recommends the land be set aside
legislatively and then suddenly the uses of that land get
restricted. The rest of the state land is largely multiple-use
land open to mineral entry, but just because it is multiple use
and open to mineral entry does not necessarily mean that mining
can happen there. An entirely separate process happens after
that where DNR has environmental analysis and 40-50 different
permits that all have their own public processes, so the public
will always get to weigh in. The intent is that most of the
state lands are multiple use. The department's job is to figure
out what should happen there and how to make each thing happen
with minimal impact on the other resources.
2:42:12 PM
MR. MASTERMAN addressed slide 24, stating Alaska does not have
as many mines as it could because there is not the information.
Currently, only about 17 percent of Alaska's land surface has
been geologically mapped at an adequate scale. At the present
rate of progress it will take about 400 years to complete it.
The unmapped area of Alaska is equal to the combined landmass of
California, Nevada, Utah, and Arizona. Turning to slide 25
depicting the state's main mineral belts, he said the mines and
most major projects are hosted within these belts. Northwest
Alaska is extremely well-endowed with the base metals of lead,
zinc, and copper. The Tintina Gold Belt is a world-class belt
of gold deposits in which the surface has barely been scratched.
It hosts Pogo at 10 million ounces, Fort Knox at 10 million
ounces, Livengood at 20 million ounces, Donlin at 40 million
ounces, and Golden Summit. The Alaska Range contains a series
of lead/zinc deposits in the Delta district and north of Healy.
The Alaska Porphyry Belt has a bright future and is where there
will be copper mines. Southeast Alaska is well endowed with
base metals: Greens Creek is the nation's largest silver
producer, Palmer and Niblack are advanced projects, and there is
the Kensington gold mine. Moving to slide 26, Mr. Masterman
noted that Alaska's production is a lot less than its global
share suggests. The commodities where Alaska could be producing
more include coal, gold, and copper.
2:46:00 PM
MR. MASTERMAN said slide 27 is an example of the kind of data
that the division produces. He noted that the [geochemistry]
data on this slide was published last summer and is from the
Wrangell Mountains and the Talkeetna Mountains. It shows rock
samples and stream samples, and the elements that he chose to
show on the slide are gold, arsenic, platinum, and palladium.
He pointed out that mining companies can get this information.
MR. MASTERMAN turned to slide 28, noting airborne geophysics are
key to understanding the geology. Moving to slide 31, he said
there is not much rock exposure in the state. However, airborne
geophysics sees through the soil and vegetation to tell what the
magnetic and resistivity properties of the rocks are, which
allows the division to make better geologic maps. He read the
statement on slide 31 by a gentleman from International Tower
Hill Mines: "It was the combination of structural and
stratigraphic ideas that came out of the state mapping program
that first led to our exploration through the Cambrian thrust
sheet and eventually the discovery of the main body of
mineralization. There is no question that the data was
instrumental to the discovery. The state geophysical data over
Livengood continues to aid us in our evaluation of the mineral
system." He said geophysics was instrumental in the division
understanding the geology and when that information was made
available to the mining companies they used it and succeeded in
finding 20 million ounces of gold.
2:48:43 PM
MR. MASTERMAN reviewed the Engineering Geology Section (slide
36), pointing out that this diverse group works on geologic
hazards around the state. He said the coastal areas of Western
Alaska are currently being worked on. These areas are being hit
hard by changes in climate - the sea ice doesn't form as early
as it used to and fall storms are really damaging some of those
local communities. The division is working collaboratively with
the National Oceanic and Atmospheric Administration (NOAA), the
National Weather Service, and the USGS on programs to help
understand what is happening in those communities.
MR. MASTERMAN highlighted the Volcanology Section (slide 46),
saying that in November [2014] the Alaska Volcano Observatory
notified the Federal Aviation Administration (FAA), the U.S.
military, and local communities about the eruption of the Pavlof
volcano. This group ensures that the flying communities and the
military don't repeat what almost happened with a KLM flight
quite a few years ago. All 52 active volcanoes in the state are
monitored and when one erupts in a sufficiently violent and
vigorous manor the group notifies the FAA, military, and local
communities to ensure people don't fly through the ash cloud.
MR. MASTERMAN drew attention to slide 52, stating that the
geological communications group is the glue that sticks the
division together and provides all of the information that is
generated to the public. In the early 2000s the division
transitioned from releasing the information as paper copies to
releasing the information via the internet. The division used
to distribute about 10,000 paper copies per year, now 400,000
maps and reports are distributed per year. The web site is
getting increased use and is growing at roughly one million page
views per year, reaching seven million views in 2014.
2:52:24 PM
CO-CHAIR NAGEAK said he wants a road to his house because of the
potential for mineral activity in his area. Such a road would
allow development of the resources just discussed.
MR. MASTERMAN responded that the USGS estimates there are eight
billion barrels of recoverable oil in the 1002 area.
2:53:34 PM
MR. MASTERMAN, responding to Representative Josephson, explained
that the term "recoverable oil" means the oil is technically
recoverable. It means there are accumulations of oil estimated
to be over a certain size threshold, he said, which he thinks is
over 50 million barrels [on the North Slope] and the estimate is
an average estimate. No economics are applied to that recovery.
A study done by the USGS in approximately 2008 applied economics
to that recovery and the USGS concluded that at $16 per barrel
there would be no economically recoverable oil in the 1002 area
of the Arctic National Wildlife Refuge. If the price was $17
per barrel there would be one billion barrels of economically
recoverable oil. Obviously, as the price goes up the number of
barrels that are economically recoverable increases.
2:55:21 PM
REPRESENTATIVE SEATON, referring to slide 9, inquired whether
the division is doing geophysical work in the areas that are
already leased or in areas that have not been leased.
MR. MASTERMAN replied that the division does not do any
geophysical work for oil and gas exploration because it is so
far beyond the division's budget. A 3-D seismic survey might
cost $10-$20 million and the division's entire budget is $5
million. The division looks at and tries to understand the
geology, in this case the geology of the shale oils. The
division tries to understand how they are formed, what their
organic content is, what their thermal evolution has been, and
where they are in the oil window to help companies find the
sweet spot, which is where the shales have gone into the oil
window but haven't been cooked too much and where they might be
sufficiently hard to be hydraulically fractured. The division
tries to provide information more on a basin-wide type of system
than on a particular prospect for a particular company.
2:57:41 PM
REPRESENTATIVE SEATON drew attention to slide 16, observing that
it only mentions potential local energy resources for oil and
gas and does not include peat resources. He asked whether the
division identifies the peat resources across the state.
MR. MASTERMAN responded that peat would be part of the work the
division does on coal. In further response, he said he is
unaware of the division publishing any maps on peat in the
recent past.
REPRESENTATIVE SEATON said he is bringing up the topic of peat
because it was identified as a local source of energy for
communities. A law was passed to make it available, but there
has not been much push on it and he is trying to assess whether
DNR is moving forward on that as a local energy supply.
COMMISSIONER MYERS replied that there are a lot of other efforts
going on in the state. Peat is really looking at vegetation and
vegetation is a biomass issue. There are also wind energy,
hydrokinetic, and regular hydro-type energy supplies. The
Division of Geological & Geophysical Surveys really doesn't do
much with those particular resources, but DNR is leading a
mapping effort in the state. The statewide digital mapping
effort is a first step of getting the elevation data to
understand what the vegetation and soil types are. The
university is working with hyperspectral surveys that can tell
that information. Understanding habitat and identifying it is a
critical piece with respect to biomass. So, DNR touches parts
of those pieces but the coordinated state effort has really been
through the Alaska Energy Authority (AEA) to identify in the
broader base resources. Geologic surveys traditionally have not
focused on living biomass, although peat is sometimes done. The
soil science piece of this is a really important component and
the Division of Agriculture does some work on that, but
fundamentally a lot of work hasn't been done. There are some
gaps there, he allowed, in terms of how the resources are being
looked at holistically. He added that the Division of Forestry
and the university are looking at biomass, not peat, because
biomass is a critical component.
REPRESENTATIVE SEATON remarked that peat drops in the middle.
It is not really biomass, it is not considered a forestry or
coal product, and it is not oil or gas, but it is an energy
resource that could be available to local communities. He said
there has not been the stimulation of peat which could provide
local employment in the obtaining and utilizing of that.
3:01:53 PM
REPRESENTATIVE OLSON recalled that he recently read of someone
finally producing hydrates in commercial quantities. He asked
whether Commissioner Myers has heard anything about this.
COMMISSIONER MYERS answered he has not and is unaware of any
commercial production. He said the state has continued to work
on a North Slope test for a long-term production test and has
withheld some acreage near Prudhoe Bay known to be hydrate rich
but not currently leased. Two days ago he met with the deputy
secretary of energy and some of the folks working on the hydrate
program and it looks like there will be funding, mostly Japanese
funding, to move forward if alignment can be made.
REPRESENTATIVE OLSON added that it was small amounts but it was
being called commercial. He believed it was either the Far East
or Siberia.
COMMISSIONER MYERS replied there has been gas production on the
Siberian side that is combined. It is thought to be hydrate
contribution to conventional gas, he said, and he thinks that
production has occurred since the 1970s or so in the fields.
They may well have deliberately gotten into a hydrate zone and
separate production, but he is not aware of it. In his opinion,
it is a very critical next step to get this long-term hydrate
test done. There have been two short-term tests in Alaska, one
injecting carbon dioxide in the North Slope recovery, which was
quite successful. The second was a relatively short test where
it is pressure. The other mechanism is thermal where energy is
put in to release the hydrate. This next test is going to be
designed to be longer term, he said, and he is optimistic that
something will be seen. [The department] has been unable to get
the U.S. interested, it is the Japanese that have shown the most
interest because they have a significant amount of hydrates
offshore of Japan. India is also very interested. The USGS
estimates 54 trillion cubic feet of hydrates are in the
identified area and a significant portion of that underlies
Prudhoe Bay, Kuparuk, and Milne Point. So, it is a huge
potential resource that in the long term is highly likely to be
produced, but there probably won't be production in the short
term until there is gas moving off the North Slope.
3:04:25 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 3:04 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Briefing_Packet_ANWR_boundary.pdf |
HRES 2/4/2015 1:00:00 PM |
|
| ccpmap.pdf |
HRES 2/4/2015 1:00:00 PM |
|
| Division of Mining Land Water Overview 4 Feb 2015 HRES.pdf |
HRES 2/4/2015 1:00:00 PM |
|
| DGGS House Resources Feb 4 2015.pdf |
HRES 2/4/2015 1:00:00 PM |
Division of Geological & Geophysical Surveys |