Legislature(2021 - 2022)BARNES 124
01/31/2022 01:00 PM House RESOURCES
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| Presentation: Federal Actions Affecting Alaska's Oil & Gas Industry | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
January 31, 2022
1:03 p.m.
MEMBERS PRESENT
Representative Josiah Patkotak, Chair
Representative Grier Hopkins, Vice Chair
Representative Calvin Schrage
Representative Sara Hannan
Representative George Rauscher
Representative Mike Cronk
Representative Tom McKay
Representative Zack Fields
MEMBERS ABSENT
Representative Ronald Gillham
COMMITTEE CALENDAR
PRESENTATION: FEDERAL ACTIONS AFFECTING ALASKA'S OIL & GAS
INDUSTRY
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
CORRI FEIGE, Commissioner
Office of the Commissioner
Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: Co-presented a PowerPoint presentation,
titled "Federal Actions Affecting Alaska's Oil & Gas Industry."
JOHN CROWTHER, Deputy Commissioner
Office of the Commissioner
Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: Co-presented a PowerPoint presentation,
titled "Federal Actions Affecting Alaska's Oil & Gas Industry."
ACTION NARRATIVE
1:03:21 PM
CHAIR JOSIAH PATKOTAK called the House Resources Standing
Committee meeting to order at 1:03 p.m. Representatives McKay,
Cronk, Hopkins, Rauscher, Hannan, Schrage, and Patkotak were
present at the call to order. Representative Fields arrived as
the meeting was in progress.
^Presentation: Federal Actions Affecting Alaska's Oil & Gas
Industry
Presentation: Federal Actions Affecting Alaska's Oil & Gas
Industry
1:04:11 PM
CHAIR PATKOTAK announced that the only order of business would
be a presentation on the federal actions affecting Alaska's oil
and gas industry.
1:04:28 PM
CORRI FEIGE, Commissioner, Office of the Commissioner,
Department of Natural Resources (DNR), co-presented a PowerPoint
presentation, titled "Federal Actions Affecting Alaska's Oil &
Gas Industry" [hard copy included in the committee packet]. She
started by saying that at the federal level there has been a
significant shift in policy since the change in administrations
in January 2021. This shift has reverberated in the energy
industry, bringing specific challenges to the Alaska oil and gas
industry. She said that 98 percent of oil produced in Alaska
comes from leases on the North Slope. Between fiscal year 2016
(FY 16) and FY 21, the year-on-year average decline was held at
just 1 percent. This flat percentage was driven by the
inefficiencies in operations and upgrades in facilities. She
listed that the Prudhoe Bay Unit showed a 5 percent production
growth; the Milne Point Unit showed a 20 percent growth because
of the consistent drilling efforts; and the Point Thompson Unit
showed over a 40 percent growth in production because of
improved facility reliability. She stated that COVID-19
pandemic protocols are currently integrated into field
operations and are being implemented by the operators.
1:08:39 PM
COMMISSIONER FEIGE described the map on slide 3. She listed:
the North Slope is 6.8 million acres, with 41 percent currently
under state oil and gas leases; the National Petroleum Reserve-
Alaska (NPR-A) is 23.3 million acres; and the Alaska National
Wildlife Refuge (ANWR) is 19.3 million acres, with 498,000 acres
leased out to 9 groups within the 1.5 million acres in the 1002
Area.
COMMISSIONER FEIGI described North Slope activities on federal
lands, as shown on slide 4. She said that in NPR-A,
ConocoPhillips is now producing from Greater Mooses Tooth 2,
while continuing to produce from Greater Mooses Tooth 1. She
stated that the Willow project development within the Bear Tooth
Unit is currently on hold because of litigation on a court-
ordered remand from an environmental impact statement; the state
is cooperating and is working to ensure information changes
hands in a timely manner. She continued that Oil Search Limited
is forming a new jointly managed unit between state and federal
leases, and it will be called the "Horseshoe Unit." She
explained that the leases in the 1002 Area within the Coastal
Plain are currently under suspension by a secretarial orders
order. An environmental impact statement review is being
supplemented for the area.
COMMISSIONER FEIGI reported that NPR-A already has large
portions which are off-limits to oil and gas development. Under
the 2020 management plan, oil and gas development are currently
not permitted in about 20 percent of NPR-A, while about 13
percent of NPR-A is under lease for oil and gas development. In
2017, the United States Geological Survey estimated there is a
mean average of 8.7 billion barrels of oil and 25 trillion cubic
feet of natural gas undiscovered and technically recoverable in
NPR-A. She expressed the opinion that federal restrictions
blocking parts of NPR-A are of great concern to the state and
industry. She indicated that the Biden Administration has
asserted it would likely set aside the current 2020 management
plan and revert to the 2013 Obama Administration management
plan; this would place 50 percent of NPR-A off-limits to oil and
gas development. The companies currently invested in NPR-A
include North Slope Exploration, Borealis Exploration,
ConocoPhillips, and Emerald Alaska Exploration. With the
"shifting sands" of federal actions, she opined, there is an
unsettling feeling for future investments for the state.
1:18:11 PM
COMMISSIONER FEIGE described slide 6, which shows the 1002 Area
map. She pointed out that the red indicates high-hydrocarbon
potential. It is divided into lease tracts, with the light-gray
areas removed. These areas were removed from lease potential by
the Bureau of Land Management (BLM) because of public comment in
relation to its significance as a calving area for the Porcupine
caribou herd. According to predictions, the full 1002 Area
could yield 800,000 barrels of oil per day. She said 400,000
acres of the white tracts shown on the map would become
available to lease in 2024, unless there are changes at the
federal level, which is a possibility under the current
administration. Of the leases which have already been sold
there is no language in the agreement which prevents a
leaseholder from selling its lease or partnering with another
party.
COMMISSIONER FEIGI stated that the total bid amount was about
$14.4 million under the royalty arrangements for the 1002 Area.
The state receives 50 percent, as well as 50 percent of the
royalties, rents, and bonus bids within the area. She added
that royalty rates increase where geological prospects are
higher. For NPR-A, there is an impact mitigation grant fund.
It was established so the state's portion of the royalty
revenues would go into a mitigation fund. The five impacted
communities in the North Slope Borough can apply for a grant
from the mitigation fund to build critical infrastructure and
service community needs. She stated that hundreds of millions
of dollars are currently going into the fund. If exploration is
forestalled in NPR-A, it would have an impact on the money which
could be used in these communities. She pointed out that there
has been a discussion about MMPA and the Endangered Species Act
restrictions throughout the habitat in the lease areas in the
North Slope.
1:50:34 PM
JOHN CROWTHER, Deputy Commissioner, Office of the Commissioner,
Department of Natural Resources, co-presenting the PowerPoint,
identified that executive orders from the Biden Administration
is placing more lands in protected status, and this will limit
oil and gas development on federal lands in the state. He said
these changes occur through executive orders, secretarial
orders, and programmatic reviews. He stated that restrictions
on federal lands could result from rule making, management
decisions, and additional environmental reviews. He pointed out
that the current administration's Executive Order 13990 created
a review, which redirected actions from the Trump
Administration. The order resulted in the suspension of the
ANWR leasing program, as it required a review which included new
environmental analysis. This created a temporary moratorium on
all activities relating to oil and gas in the Coastal Plain.
MR. CROWTHER explained that Executive Order 14008 placed an
indefinite pause on new oil and natural gas leases on federal
lands and in offshore waters; directed the U.S. Department of
Interior (DoI) to conduct a review of the federal oil and gas
leasing program; and set a goal of conserving at least 30
percent of lands and waters by 2030, also known as the "30x30"
initiative. He stated that currently 30 percent of land in
Alaska is conserved by the federal government. He added that
the state also conserves some of its lands. He pointed out that
the Secretarial Order S03355 suspended the delegated authority
of subordinate DoI agencies, giving U.S. Secretary of the
Interior more authority. He stated that one of the effects was
local offices could not proceed with regular activities without
clearance from Washington, D.C. He pointed out the Secretarial
Order S03401 involves a comprehensive analysis and temporary
halt to all activities relating to oil and gas leasing in the
Coastal Plain.
2:06:39 PM
MR. CROWTHER stated that if there is an authorization issued or
finalized land management plan, a public process is required to
reverse or revise it. He stated this allows the state and the
public to participate before a redirection can be made. He
added that the state has attempted to intervene in litigation in
order to defend existing processes. He said, "Slow is 'no'
spelled differently," as the federal administration executes
existing programs in a way which controls the flow or delays
actions. He described local program managers taking months for
a review, with decisions sent to Washington, D.C. for additional
review. He argued that this takes time, and there is a limited
capacity of the state to request action from the federal
government. Developing expertise within the Department of Law
(DOL), as well as consulting with outside council is needed to
compel action from being delayed.
2:12:37 PM
COMMISSIONER FEIGE, in reference to slide 14, said the governor
created an initiative in the defense of statehood in response to
these delays. She described the initiative as being made up of
various departments, including the Alaska Department of Fish and
Game, the Department of Environmental Conservation, DNR, DOL,
and policy directors from the Office of the Governor. The focus
has been on the unique legal rights under Alaska National
Interest Lands Conservation Act (ANILCA). She pointed out that
some examples of the work done by the team includes advocating
for the state, participating in rule-making projects, issuing
comments on behalf of the state, and supporting litigation. She
added that significant state resources are already dedicated to
participating in federal processes by pushing federal entities
to respect state sovereignty and by challenging overreach. She
asserted that the governor continues to seek sufficient funding
for this effort.
COMMISSIONER FEIGE discussed how the use of some specific
terminology impacts the oil and gas industry. For example, the
use of the term "climate crisis" has led to the pause of oil and
gas lease sales nationwide. She stated that the use of "fair
share" describes the federal government increasing royalties,
fees, and taxes on development on federal lands. She argued
that this changes the economics of projects under consideration
for development. She indicated that the terminology, "social
cost of carbon," is a catchphrase which suggests the need for
national and international emissions regulations. She said
"protecting ANWR" is a phrase frequently repeated by leaders
throughout the current administration. These "catch-phrases,"
she noted, have implications for Alaska's oil and gas industry.
2:18:54 PM
COMMISSIONER FEIGE addressed federal impacts on NPR-A, including
there were no NPR-A lease sales in 2020 or 2021, lease sales are
highly unlikely in 2022, and a federal court vacated the Willow
project's permits in 2021. Referencing future possible impacts,
she stated that the final environmental impact statement (EIS)
is scheduled to come out in March 2022, a final federal decision
can be expected in October 2022, and state permitting decisions
will be made by the end of 2022. She stated that ConocoPhillips
could possibly begin construction in early 2023. She concluded
that the Willow project has already been significantly delayed;
the longer it is delayed, the more money it costs the state
through the impact mitigation fund and royalties.
2:23:29 PM
COMMISSIONER FEIGE, continuing with federal impacts, stated that
the NPR-A integrated action plan for 2020 is on pause and will
be redirected towards the 2013 plan. She reiterated that lands
in the NPR-A for oil and gas leasing will be significantly
reduced. Based upon climate mitigations, existing leases will
be impacted. She indicated that tools like the incidental polar
bear take from [the Marine Mannal Protection Act (MMPA)] will be
used to limit exploration and future development. She argued
that this combined with increased uncertainty will reduce
investment in projects, reduce jobs, and affect the state's
gross domestic product. Regarding the 1002 Area within ANWR,
she said, billions of dollars of investment are on hold because
of federal actions. She indicated that the state has urged BLM
to honor the law, the 2020 decision, and the existing leases.
The state has also pressed for and accepted cooperating agency
status with BLM for the additional environmental analysis.
2:32:07 PM
MR. CROWTHER discussed the outer continental shelf (OCS) and how
Executive Order 13990 resumed a withdrawal from leasing in the
Chukchi, Beaufort, and Bearing Seas. He stated that the Biden
Administration has rejected proposed changes made by the
previous administration, and the Bureau of Ocean Energy
Management (BOEM) published an EIS in January 2021 to hold a
lease sale in federal areas of the Cook Inlet. By February,
BOEM cancelled the statement in response to the lease sale pause
from the executive order. In June 2021, a federal judge issued
an order which temporarily blocked the Biden Administration's
pause on new oil and gas leasing on public lands and waters;
therefore, future lease sales are highly uncertain because the
OCS program in Cook Inlet expires in 2022. The state is
continuing to press for the sale to move forward, but there
remains a lot of uncertainty.
2:35:49 PM
COMMISSIONER FEIGE detailed the impact of financial policies
which are specifically averse to Arctic oil and gas activity.
She said this includes environmental policies, social and
governance reporting requirements, and company activities.
Concerning company policies, she voiced the opinion that
institutional shareholders and clients are seeking to align with
the energy transition and climate policies of the current
federal administration. She concluded that there is pressure
from investor shareholders to divest from fossil fuels.
COMMISSIONER FEIGE argued that Alaska has rigorous and science-
based environmental permitting and compliance programs which
apply to all operators. She voiced that operators are
continuing to improve technology and efficiency so costs can be
driven down and greenhouse gas emissions can be reduced.
Alaska's anti-wasting law prohibits venting natural gas and
wasting oil, as fugitive natural gas emissions are required to
be monitored and corrected. She pointed out that Texas and
Oklahoma have less strict rules. She stated that Alaska uses
its royalty revenues to provide dividends to the state's
residents, fund state government, and pay for education, health
and community infrastructure. She said corporations created
from the Alaska Native Claims Settlement Act own their lands and
determine uses. She argued that the legal system and "social
license" drive corporate culture and values; therefore, Alaska
needs public input at all stages of development to protect
subsistence rights and practices. She pointed out that Alaska
meets the Equator Principles. These principles are a series of
metrics adopted by financial institutions to determine and
assess the management of environmental and social risks in
projects. She maintained that Alaska is a longtime leader in
all categories measured under environmental, social, and
governance metrics. She informed the committee that Alaska
ranks in the top quartile in average carbon intensity, ranks
tenth lowest among states in carbon emissions from human
activities, and ranks the lowest in carbon emissions when
compared to other fossil fuel states. She stated that this is
according to the U.S. Energy Information Administration.
2:47:59 PM
COMMISSIONER FEIGE concluded that the current federal
administration is taking a comprehensive approach to limiting
oil and gas development on federal lands by seeking to unwind
all the Trump Administration actions and programs by placing
more lands into protected status regardless of preexisting laws,
like ANILCA. In a unified response to "federal threats," she
said, the state is engaging in the required federal
environmental reviews and administrative processes for
rulemaking, coordinating its resource management agencies, and
coordinating with other states in order to take action by
holding the federal administration accountable to ensure a fair,
transparent, and proper process.
3:03:34 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 |
|---|---|---|
| DNR Presentation Fed Actions Affecting Oil and Gas 1.31.2022 .pdf |
HRES 1/31/2022 1:00:00 PM |
DNR Federal Issues Affecting Oil and Gas |