Legislature(2025 - 2026)BARNES 124
02/19/2025 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Dnr Leasing Issues | |
| 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 19, 2025
2:05 p.m.
MEMBERS PRESENT
Representative Robyn Niayuq Burke, Co-Chair
Representative Carolyn Hall
Representative Donna Mears
Representative Zack Fields
Representative Dan Saddler
Representative George Rauscher
Representative Julie Coulombe
Representative Bill Elam
MEMBERS ABSENT
Representative Maxine Dibert, Co-Chair
COMMITTEE CALENDAR
PRESENTATION(S): DNR LEASING ISSUES
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
JOHN CROWTHER, Deputy Commissioner
Alaska Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: Presented a PowerPoint regarding North
Slope leasing issues.
MARY GRAMLING, Chief Assistant Attorney General
Alaska Department of Law
Juneau, Alaska
POSITION STATEMENT: Provided background regarding North Slope
leasing issues.
ACTION NARRATIVE
2:05:01 PM
CO-CHAIR BURKE called the House Resources Standing Committee
meeting to order at 2:05 p.m. Representatives Hall, Mears,
Fields, Saddler, Rauscher, Coulombe, Elam, and Burke were
present at the call to order.
^PRESENTATION(S): DNR Leasing Issues
PRESENTATION(S): DNR Leasing Issues
2:05:41 PM
CO-CHAIR BURKE announced that the first order of business would
be a presentation by the Department of Natural Resources on
leasing issues.
2:06:07 PM
JOHN CROWTHER, Deputy Commissioner, Alaska Department of Natural
Resources, presented a PowerPoint regarding North Slope leasing
issues and the role of the Alaska Department of Natural
Resources (DNR). He reminded the committee that the matter is
pending appeal before the Alaska Supreme Court, and he would
need to limit his presentation as well as answers to questions.
He pointed out that during the winter of 2024-2025 there were
activities on the North Slope associated with the permit in
question, but there had been assurances the work would not be
delayed. He emphasized the importance of having access to the
North Slope sites regardless of the permit holder or the
location of the development.
2:09:14 PM
MR. CROWTHER showed slide 2, titled "Appendix D from MLUPNS 22-
001," which showed a map of Prudhoe Bay color-coded for company
permits. He identified the corridors and explained which roads
are in question. He drew attention to the right side of the map
which showed the connection to the Dalton Highway, describing it
as the route used by all ground transportation to provide the
Prudhoe Bay unit with supplies and equipment. He talked about
the Pikka and Willow projects and the amount of expected
production, describing those projects as a paradigm shift for
Alaska.
2:13:30 PM
MR. CROWTHER moved to slide 3, titled "North Slope Leases,"
which showed a map of specific leases. He provided information
regarding the leaseholders and explained the unit color-coding.
He described which leases were privately held, which were state
owned, and which belonged to the federal government. He pointed
out the importance of road access for continuing development on
the slope.
2:16:44 PM
MR. CROWTHER summarized the three core interests regarding
leasing. First, there are constitutional mandates and statutory
directives to maximize development and bring revenue to the
state. This mandate encompasses royalties, production taxes,
and benefits to Alaskans such as employment. Second, when
dealing with questions about permitting and managing access, DNR
has been cognizant of several interests, including the
environmental footprint and assisting companies with new
explorations and developments. Finally, the state has
significant interest in making sure the terms and covenants of
the unit agreements and leases are maintained while having a
clear authority and a reputation for actively managing the
leases. He completed his presentation by stating the importance
of all parties having clear road access to the North Slope
units. He said the state did not dispute ConocoPhillips Alaska
having the right to develop the oil and gas on their unit and to
use the surface, free from reasonable interference. As the
court case proceeds, DNR will be fully engaged in making sure
the State's interests are protected.
2:22:24 PM
MR. CROWTHER, in response to a question from Representative
Saddler, explained he was not aware of any other pending
litigation. He noted that possible investors are following this
case closely.
2:23:32 PM
MARY GRAMLING, Chief Assistant Attorney General, Alaska
Department of Law, provided background regarding North Slope
leasing issues. She explained that she would not be able to
give details because the matter was in active litigation. She
was able to provide an outline of matters that were not in
dispute as well as the general issues being litigated. In 2021
Santos/Oil Search requested a permit under a miscellaneous land
use permit. After the comment period, DNR issued the permit
with certain conditions including provisions concerning the use
of the corridor by the primary lessee. It also provided for
indemnification insurance and bonding in favor of the State. In
addition, if there were damages, Santos/Oil Search was required
to reimburse ConocoPhillips. After the permit was issued,
ConocoPhillips appealed the permit to the DNR commissioner.
Santos then submitted comments to the appeal, and Conoco
submitted additional briefing. In December 2022, the
Commissioner issued a decision affirming the DNR director's
decision granting the permit and denying the ConocoPhillips
appeal. Conoco then appealed the decision to the Superior
Court, and Santos intervened in support of the State's decision.
Briefings were submitted, and oral arguments were made before
the Superior Court. A decision was issued from the bench;
ConocoPhillips submitted a proposed decision; and objections
were filed to the proposed decision. In December of 2024, a
decision was signed by the Superior Court judge. (Copy of the
decision available in the committee packet) The State requested
a stay, and the Superior Court granted a stay until January 16,
2025. During that time, both the State and Santos filed appeals
before the Alaska Supreme Court. The State's brief would be due
March 17, 2025. Filings for attorney's fees were also pending
before the Superior Court.
2:29:14 PM
MR CROWTHER responded to a question from Representative Rauscher
regarding road use on the North Slope by explaining it was
difficult to quantify as each of the companies have different
methods for figuring this out.
2:30:41 PM
MR. CROWTHER discussed a question from Representative Saddler
regarding how much this particular dispute has cost the state
and what the implications might be for future North Slope
development.
2:34:17 PM
MS. GRAMLING, in response to a question by Representative
Coulombe, explained that she had not previously seen a situation
where the decision was written by one of the parties in a
dispute and used by the judge. She said it was unusual for a
judge to use a decision drafted by one of the parties and
pointed out it was one of the State's points of objection.
2:35:52 PM
MR. CROWTHER addressed a question from Representative Fields
about whether the legislature should be working on a statutory
solution to North Slope rights-of-ways by saying that it might
be addressed in the future but not at this time.
2:37:28 PM
MR. CROWTHER responded to a series of questions from
Representative Coulombe and Representative Fields regarding the
North Slope roads. He briefly described the history of North
Slope road use and the dynamics regarding the road network from
early Prudhoe Bay development to more recent expansions. He
explained that even though the issue is being litigated, the
roads will not be blocked during the season.
2:42:45 PM
MR. CROWTHER addressed a series of questions from Co-Chair
Burke. He explained that the dispute between Santos and Conoco
was the first time DNR regulation authority for the use of North
Slope access corridors had been an issue. For the purpose of
comparison, he referenced a dispute regarding a Mustang field
easement which included questions of access. Agreement on that
matter was reached, and there was no active litigation
concerning that question. There have been commercial agreements
regarding road access, but those do not involve DNR. Regarding
the question of roads being used for other purposes, such as
community uses, transit by residents, the U.S. military, and
scientific research, the state would maintain the ability to
authorize multiple uses.
MS. GRAMLING commented further on reasonable and concurrent uses
of state lands.
2:48:59 PM
MS. GRAMLING responded to a question from Representative Saddler
by explaining that reasonable and concurrent use could include
indemnification, insurance, bonding, and priority of use.
MR. CROWTHER provided additional information by explaining that
DNR believes it has authorities associated with lease agreements
and unit agreements among other statutory authorities which
ensure reasonable and fair use and access. There are
significant reservations and conditions to the permit that are
believed to be within department authority to include and
reflect the primary use of Conoco to use those roads for the
purpose of development and not be interfered with for the
purpose of development.
2:51:22 PM
MR. CROWTHER responded to questions from Representative Coulombe
regarding the road dispute. He explained that the filings
submitted by Conoco posit that the road is their property on
their lease and the State doesn't have a reservation that allows
its use. Therefore, Conoco has the total authority to set the
terms on that use including the commercial terms. The State's
position is that those reservations allow the primary use of oil
and gas development but don't allow the total right to exclude
or set terms. In the future, DNR will make abundantly clear to
all lessees and unit operators that the reservations apply
specifically in this way. The state does not believe there is
an ambiguity, but clarification can moot this in the future.
2:55:00 PM
REPRESENTATIVE RAUSCHER moved to rescind action on HSCR 1.
2:55:11 PM
The committee took a brief at-ease at 2:55 p.m.
2:55:27 PM
[CO-CHAIR BURKE ruled the motion out of order]
REPRESENTATIVE RAUSCHER explained that he wished to rescind the
vote used to move HSCR 1 out of committee. He said his motion
was not out of order because he was moving to rescind the motion
to move the resolution out of committee. Without this, the
resolution will be stuck in committee.
3:04:50 PM
REPRESENTATIVE FIELDS explained why it was correct to rule
Representative Rauscher's motion out of order.
REPRESENTATIVE SADDLER stated his belief that there needed to be
clarity on the issue and objected to the ruling of the Co-Chair.
CO-CHAIR BURKE reviewed the actions of the previous meeting of
the House Resources Standing Committee regarding HSCR 1. She
requested that the clerk call the roll
REPRESENTATIVE RAUSCHER clarified that the vote before the
committee is in regard to the Chair's overruling of the motion
to rescind previous action on HSCR 1. A yes vote supports the
ruling of the Chair; a no vote opposes the ruling of the Chair.
3:06:39 PM
The committee took a brief at-ease at 3:06 p.m.
3:06:48 PM
A roll call vote was taken. Representatives Hall, Mears,
Fields, and Burke voted in favor of sustaining the ruling of the
Chair. Representatives Coulombe, Rauscher, Saddler, and Elam
voted against it. Therefore, by a vote of 4 yeas and 4 nays,
the ruling of the Chair was sustained.
3:09:53 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 3:09 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| DNR-LAW Leasing Issues presentation HRES 2-19-25.pdf |
HRES 2/19/2025 1:00:00 PM |
|
| 3AN-22-09828CI.pdf |
HRES 2/19/2025 1:00:00 PM |
Superior Court Decision re: North Slope Leasing Issues |