Legislature(2021 - 2022)SENATE FINANCE 532

01/19/2022 09:00 AM Senate FINANCE

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09:01:10 AM Start
09:01:55 AM Production Forecast: Department of Natural Resources
10:54:46 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Production Forecast, Department of Natural
Resources, Pascal Umekwe - Petroleum Reservoir
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  SENATE FINANCE COMMITTEE                                                                                      
                      January 19, 2022                                                                                          
                         9:01 a.m.                                                                                              
9:01:10 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair   Stedman    called   the   Senate   Finance    Committee                                                              
meeting to order at 9:01 a.m.                                                                                                   
MEMBERS PRESENT                                                                                                               
Senator Click Bishop, Co-Chair                                                                                                  
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Donny Olson                                                                                                             
Senator Natasha von Imhof                                                                                                       
Senator Bill Wielechowski                                                                                                       
Senator David Wilson                                                                                                            
MEMBERS ABSENT                                                                                                                
Senator Lyman Hoffman                                                                                                           
ALSO PRESENT                                                                                                                  
John  Crowther,   Deputy  Commissioner,   Department   of  Natural                                                              
Resources;   Maduabuchi   Pascal   Umekwe,   Petroleum   Reservoir                                                              
Engineer,   Department   of  Natural   Resources;   Corri   Feige,                                                              
Commissioner, Department of Natural Resources.                                                                                  
PRODUCTION FORECAST: DEPARTMENT OF NATURAL RESOURCES                                                                            
9:01:55 AM                                                                                                                    
AT EASE                                                                                                                         
9:05:39 AM                                                                                                                    
Co-Chair  Stedman  discussed  protocol   for COVID-19.  He  stated                                                              
that  mask-wearing   would  be  required  in  the  Senate  Finance                                                              
Committee  room  until  further  notice.  He anticipated   ongoing                                                              
discussions with Legislative Council.                                                                                           
Co-Chair   Stedman  introduced   his   staff  and  discussed   the                                                              
roles in his office, which included the operating budget.                                                                       
Co-Chair  Stedman  discussed   the role  of  Co-Chair  Bishop  and                                                              
his  staff.  He explained   that Co-Chair   Bishop  worked  on the                                                              
capital budget and legislation.                                                                                                 
Co-Chair   Stedman   introduced   Senator   von   Imhof   and  her                                                              
9:09:31 AM                                                                                                                    
Co-Chair Stedman introduced Senator Olson and his staff.                                                                        
Co-Chair   Stedman  introduced   Senator   Wielechowski   and  his                                                              
Co-Chair Stedman introduced Senator Wilson and his staff.                                                                       
Co-Chair  Stedman  introduced  Senator  Hoffman  and his  staff.                                                                
9:11:58 AM                                                                                                                    
Co-Chair   Stedman  introduced   the  Senate   Finance   Committee                                                              
staff.   He   introduced    the  staff   from   the   Legislative                                                               
Information Office.                                                                                                             
9:13:22 AM                                                                                                                    
Co-Chair  Stedman  explained   that  the committee   would  engage                                                              
in  the  budgetary   process   in  a  manner  like  the   previous                                                              
year.   The  committee    would  take   the  executive    branch's                                                              
submitted   budgets,   remove   non-recurring    funds   and  fund                                                              
adjustments  to  work  with a  base budget  that  would appear  as                                                              
"Committee  Substitute   Zero."  He thought  it  was important  to                                                              
have  a  base   document  to  work   from  to  provide   accuracy,                                                              
after  which  the committee  would  layer  on other  fund  sources                                                              
such   as  federal   funds   and   COVID-19   relief   funds.   He                                                              
discussed    recurring    revenue    and   the   opportunity    to                                                              
recognize a structural deficit.                                                                                                 
Co-Chair   Stedman  discussed   committee  decorum.   He  reminded                                                              
that  there  was no  eating  allowed  at the  table,  nor  outside                                                              
reading  materials.   He commented   that  the current   committee                                                              
had  the  most  experienced  finance   staff  ever  assembled,  in                                                              
terms  of years  of  experience  and  background.   He noted  that                                                              
the  members  did  not  agree  on all  matters,  and  there  would                                                              
be  thorough  discussion   and  analysis  as  the  members  worked                                                              
through issues.                                                                                                                 
9:16:14 AM                                                                                                                    
Co-Chair    Stedman   commented    that   there   were   two   new                                                              
committee  aides.  He  wanted  to  recognize  that  meetings  were                                                              
for  the public  and  the  material  was presented   in an  easily                                                              
understood   format.  He  asserted  that  understanding   was  the                                                              
9:18:29 AM                                                                                                                    
Co-Chair   Bishop  commented   on  safety   and  noted   that  the                                                              
staff  tables  had  been  refinished   and  had  sharp  edges.  He                                                              
noted the emergency exits in the room.                                                                                          
9:19:23 AM                                                                                                                    
Co-Chair Stedman introduced the presenters.                                                                                     
^PRODUCTION FORECAST: DEPARTMENT OF NATURAL RESOURCES                                                                         
9:20:33 AM                                                                                                                    
JOHN  CROWTHER,   DEPUTY  COMMISSIONER,   DEPARTMENT   OF NATURAL                                                               
RESOURCES,    introduced    himself   and   relayed   that   Corri                                                              
Feige,  Commissioner,    Department   of  Natural  Resources   was                                                              
also online.                                                                                                                    
9:21:00 AM                                                                                                                    
MADUABUCHI   PASCAL   UMEKWE,   PETROLEUM   RESERVOIR   ENGINEER,                                                               
DEPARTMENT OF NATURAL RESOURCES, introduced himself.                                                                            
9:21:32 AM                                                                                                                    
CORRI  FEIGE,  COMMISSIONER,   DEPARTMENT  OF NATURAL  RESOURCES,                                                               
explained   that  the  Department   of  Natural  Resources   (DNR)                                                              
she  shared   that  the  oil  sector   had  experienced   recovery                                                              
from  the  beginning   of  the   global  pandemic   in  2020.  She                                                              
stated  that  demand was  currently  ahead  of supply.  She  noted                                                              
that  Alaska  crude   closed  just  above  $89/bbl   the  previous                                                              
day.  She   relayed  that   2022  could  see  a  rebound   in  oil                                                              
prices,   which  could   change  quickly   due  to  the   volatile                                                              
nature  of the  oil  market.  She related   that at  a meeting  on                                                              
January   4,  2020,   Oil  Producing   and   Exporting   Countries                                                              
(OPEC+)   nations  announced   that   they  planned   to  continue                                                              
their  restrained   month  increase   in  supply.  She  said  that                                                              
the   restrained   approach   could   indicate    that  the   idle                                                              
capacity  of  these nations  could  make  it difficult  to  return                                                              
to  production.   She   said  that  this   market  sentiment   had                                                              
driven   prices  over  the  past   few  weeks.  She   stated  that                                                              
stronger   and  more  stable  prices  and  increased   demand  was                                                              
good  for  Alaskas   industry.  She  lamented  that  operators  in                                                              
Alaska   faced   significant   headwinds   due   to  the   current                                                              
political   climate.   She  opined   that   all  companies   faced                                                              
pressure   to  exhibit   capital   discipline   and  to   increase                                                              
shareholders    profits   and   returns,    that   combined   with                                                              
climate   activism  had   resulted  in   financial  barriers   and                                                              
slower   reinvestment   in  the   sector.   She  said   that  even                                                              
during  uncertain  times,  Alaska's  operators  were  taking  full                                                              
advantage   in  the  price   rise  and  near-term   stability   to                                                              
capture  efficiency  and  production  from  existing  assets.  She                                                              
asserted   that  this  had  resulted   in  decline   rates  across                                                              
several of the states North Slope fields.                                                                                       
9:24:18 AM                                                                                                                    
Mr.   Umekwe    introduced    the   presentation,      Fall   2021                                                              
Production Forecast.                                                                                                            
9:25:07 AM                                                                                                                    
Mr. Umekwe looked at slide 2, "Agenda":                                                                                         
           ?FY2021 in Review                                                                                                    
           ?DNR Production Forecasting Approach                                                                                 
      ?Fall 2021 Forecast Results                                                                                               
9:25:28 AM                                                                                                                    
Mr. Umekwe  showed  slide  3, "BACKGROUND:  FY  2021 IN  REVIEW."                                                               
Mr.  Crowther  referenced  slide  4,  "FY  2021 AS  FORECASTED  BY                                                              
DNR IN FALL2020: HOW DID WE DO?":                                                                                               
       DNR forecast proved reliable for State revenue                                                                         
      planning, as actual FY 2021 production came in within                                                                   
      DNR's forecasted range.                                                                                                 
           ?DNR  expected  case  forecast  was  ~5%  under  actual                                                              
           FY 2021 production                                                                                                   
       New factors to watch for that are currently shaping                                                                    
      the forecast horizon                                                                                                    
            Strong  Environmental   Social  and  Governance  (ESG)                                                              
           influences   introduce   a  new  terrain   for  capital                                                              
           allocation   decisions   in  the   Arctic,  especially                                                               
           for      early-stage       oil      projects      under                                                              
           development/evaluation       ?Current      Production:                                                               
           Varied  operator   responses  to  the  many  phases  of                                                              
           the  covid-19  pandemic  influencing   several  aspects                                                              
           of field management and redevelopment efforts                                                                        
Mr.  Umekwe  looked   at  the  bar  graph  entitled   'DNR  FY2021                                                              
North  Slope  Forecast   (Generated   in  Fall  2020)'  and  noted                                                              
that  the black  bar  showed  actual  production.   The grey  bars                                                              
represented   forecasts.    He  reported   that   production   had                                                              
fallen  within  the projected  range.  He  pointed  to two  of the                                                              
factors  that  were  active  in  shaping  the  forecast     strong                                                              
environmental   social  and  governance  influences   and  current                                                              
production due to Covid-19.                                                                                                     
Mr.  Umekwe discussed   how the  COVID-19  pandemic  had  affected                                                              
9:28:59 AM                                                                                                                    
Senator   von  Imhof  appreciated   slide  4  showing   the  high,                                                              
middle,  and  low  forecasts.   She  asked  whether  there   was a                                                              
slide  that  showed  how  the  forecasts  translated   to  revenue                                                              
to the state at various prices.                                                                                                 
Mr.  Crowther   stated  he  would  be  happy   to  work  with  the                                                              
Department   of  Revenue  (DOR)   to prepare   a  summary  of  the                                                              
Co-Chair  Stedman  relayed  that  the request  would  be  directed                                                              
to DOR.  He explained   that "all  oil was  not  the same   as far                                                              
as  it  translated   to  dollars  into  the  treasury.   He  noted                                                              
that  all  oil  was the  same  in  the  pipeline  but  there  were                                                              
significant  differences   in price  depending  on  where  the oil                                                              
came from.                                                                                                                      
9:30:51 AM                                                                                                                    
Mr.  Umekwe   commented   that   the  appendix   of  the   Revenue                                                              
Sources Book contained a list of various oil prices.                                                                            
9:31:16 AM                                                                                                                    
Mr.   Umekwe    turned   to   slide    5,   "FY   2021    SUMMARY:                                                              
      Highlights (FY2021 vs FY2020)                                                                                           
           ?All fields are generally expected to see a year-                                                                    
           on-year decline                                                                                                      
           ?Compared to FY2020, in FY 2021 North Slope                                                                          
         production increased by ~2% (~10,000 bopd)                                                                             
           ?GPBU: 5% production growth due to well/facility                                                                     
           optimization efforts                                                                                                 
           ?MPU: 20% production growth due to consistent                                                                        
           drilling efforts                                                                                                     
           ?PTU:    Over    40%   growth;    improved     facility                                                              
           ?KRU: Production essentially held flat at FY20                                                                       
           ?GMT1:  Over ~50% drop. Reservoir challenges                                                                         
         ?Oooguruk: Absence of drilling since 2016                                                                              
Mr.  Umekwe thought  slide  5  showed a  snapshot  of production.                                                               
He  drew   attention   to   the  graph   on  the   bottom   right,                                                              
'Production   Changes   Across   North  Slope   Assets   (FY21  vs                                                              
FY20),'  and  noted  the  5  percent  production   growth  due  to                                                              
significant well and facility optimization efforts.                                                                             
Mr.  Umekwe  drew  attention  to  the  Point  Thomson  unit  shown                                                              
on  the graph  and  noted  the transition   from Exxon  Mobile  to                                                              
Hilcorp.  He  said that  in  the last  years  that  Exxon  ran the                                                              
unit  they  had  made  many  upgrades.  He  said  that  the  wells                                                              
were  currently  always  online.  He discussed   the fields  where                                                              
a decrease had been noted.                                                                                                      
9:35:30 AM                                                                                                                    
Senator  Wielechowski   referenced   Point  Thomson,  and  thought                                                              
the  state   had  a  settlement   agreement   with  the   previous                                                              
operators.  He  recalled  that  10,000  barrels  were supposed  to                                                              
be produced   every day.  He asked  Mr.  Umekwe  to discuss  Point                                                              
Thomson  development,   and whether  the  operators  had  followed                                                              
the settlement agreement.                                                                                                       
Mr.  Umekwe recalled   that the  goal of  the agreement   had been                                                              
to  produce   200  million   cubic   feet  of  gas   per  day.  He                                                              
deferred  to  the  Alaska  Oil and  Gas  Conservation  Commission                                                               
Co-Chair   Stedman   asked  Mr.   Umekwe   to  get  back   to  the                                                              
committee  with  more  information,  including   more information                                                               
on   the   tariff    structure.    He   discussed    getting   the                                                              
condensate   out   of  Point  Thompson   and   into  Trans-Alaska                                                               
Pipeline System (TAPS) was of interest to the committee.                                                                        
Mr. Crowther agreed to provide the information.                                                                                 
9:37:46 AM                                                                                                                    
Senator   Wielechowski    had   a   budget   briefing   with   the                                                              
governor's   office  a few  weeks  previously.   He  thought  that                                                              
gas  that had  been  previously  shipped   and reinjected   was no                                                              
longer  being  handled   in the  same  manner  and  that  oil  was                                                              
now   being  counted   toward   production   that   had   no  been                                                              
previously counted as such.                                                                                                     
Mr.   Umekwe    asked    whether    Senator    Wielechowski    was                                                              
referencing    NGOs   that   had   been  previously    moved.   He                                                              
explained   that  over  the  previous   two  years,   natural  gas                                                              
liquids  had  been  shipped  from  the  Prudhoe  Bay  unit  to the                                                              
Kuparuk  River   unit  for  use  in  enhanced   oil  recovery.  He                                                              
relayed  that   that  practice  had  stopped,   and  the  pipeline                                                              
was  now being  used  for  the  transfer  of gas  to  use  as fuel                                                              
in  the  Kuparuk   River  unit.  He  summarized   royalties   were                                                              
paid  on natural  gas  liquids  that  left  the Prudhoe  Bay  unit                                                              
because  it  crossed  unit  boundaries.   He said  that  when  the                                                              
liquid  went  to the  Kuparuk  River  unit,  royalties  were  paid                                                              
upon  production.   He  said  that  the  cost  in  the projection                                                               
was  adjusted  within  the total  revenues  the  operators  had to                                                              
pay at the Kuparuk unit.                                                                                                        
9:40:27 AM                                                                                                                    
Senator  Wielechowski   asked  whether  the  situation  caused  an                                                              
increase or decrease in any of the forecast numbers.                                                                            
Mr.  Umekwe   replied   in  the   negative.   He  said   that  the                                                              
numbers  in  the  source  book were  based  on  what  came  out of                                                              
the ground.                                                                                                                     
9:40:49 AM                                                                                                                    
Co-Chair   Stedman  asked   Mr.  Umekwe   to  discuss  processing                                                               
facilities   on   the   North   Slope.   He  wondered   how   many                                                              
facilities   there  were,   and  which  were  operating   at  full                                                              
capacity.   He  asked   about   the  reasons   for  increases   at                                                              
Prudhoe  Bay  and  Melanie   Point  and  wondered   whether  those                                                              
gainful processes could be applicable elsewhere.                                                                                
Mr.   Umekwe   stated   that   the   Prudhoe   Bay   unit   had  6                                                              
processing  facilities   and  the Kuparuk  River  unit  had  3. He                                                              
said  that all  the facilities   were operational.   He said  that                                                              
the  gains  seen   at  the  Greater  Prudhoe   Bay  unit  was  the                                                              
result  of the  utilization  of the  capacity  of that facility.                                                                
Co-Chair    Stedman   asked    Mr.   Umekwe   to   provide    more                                                              
information   about  the  processing   facilities.  He  asked  for                                                              
more  information   about  the  change  in  operators  in  Prudhoe                                                              
Bay  and the  benefits  of  enhancing  processing   facilities  to                                                              
increase production.                                                                                                            
9:44:10 AM                                                                                                                    
Senator   Wielechowski   discussed   production   facilities.   He                                                              
had  heard that  Oil  Search  had reached   out and  tried  to use                                                              
ConocoPhillips's   facility.   He wondered   whether  the  request                                                              
had been honored.                                                                                                               
Mr.   Crowther    was   aware   of   the   negotiations    between                                                              
companies,  as  it related  to  sea water  treatment  and  oil and                                                              
liquids  processing.   He  relayed  that  the  Pikka  project,  as                                                              
designed  by  Oil  Search,   included  a  significant  processing                                                               
facility,   which  could  add  to  the  capacity  of  the  western                                                              
North Slope and be beneficia to the state.                                                                                      
Senator   Wielechowski    understood   there   were  negotiations                                                               
between    companies.    He   wondered   to   what    degree   the                                                              
administration   was  participating   in those  negotiations.   He                                                              
queried   whether    the   legislature   should    encourage   the                                                              
negotiations  since  the  state would  benefit  from the  access.                                                               
Mr.  Crowther  thought   Senator  Wielechowski   had made  a  fair                                                              
point. He thought the commissioner would want to comment.                                                                       
Co-Chair   Stedman  interjected   that  any  new  entrants   could                                                              
build  their  own facility  and  would  have to  negotiate  access                                                              
into other facilities.                                                                                                          
9:46:31 AM                                                                                                                    
Commissioner   Feige  clarified  that  Oil  Search  had  opted  to                                                              
construct   their  own   seawater  treatment   facility   for  the                                                              
Pikka   Development.     She   said   there   had    been   issues                                                              
surrounding   the chemistry   of  the water  that  could  be  used                                                              
for  maximizing  oil production   out of  Pikka if  the water  was                                                              
sourced   through  ConocoPhillips's    existing  water   treatment                                                              
facility.  She  understood   that  to accommodate   production  in                                                              
Willow,  ConocoPhillips   would   need  to expand   their  Oliktok                                                              
Point  seawater   treatment   facility.   She  relayed   that  Oil                                                              
Search   had  always   intended   to  construct   their   own  oil                                                              
processing   facilities,   which  would  be  modularized   in  two                                                              
phases.  She  said  the  pan was  to  begin  with  80,000/bbl  per                                                              
day  with a maximum  of  160,000bbl/  pre  day in  phase  two with                                                              
the  second  module.   She  related  that  overlapping   need  and                                                              
use  was  found  with access   roads that  the  two  parties  were                                                              
currently   negotiating  commercial   arrangement   for  long-term                                                              
access.  She  said  that  in both  the  Colville  and  Pikka  unit                                                              
cases  included   state  resources  being  developed   with  state                                                              
leases  on  state  land.  She asserted  that  the  administration                                                               
had  the  authority  to  engage   the state   should  the  parties                                                              
not arrive at a commercial agreement.                                                                                           
9:48:56 AM                                                                                                                    
Co-Chair   Stedman  asked  Commissioner   Feige   to  discuss  how                                                              
the  department  monitored   the time-value   of  money  regarding                                                              
the developments.                                                                                                               
Commissioner   Feige  affirmed   that  the  time  value  of  money                                                              
was  very  important.  She  explained   that  the  department  was                                                              
watching  proposed   timeline  closely.  She  had been  told  that                                                              
the  final  investment  decision   (FID)  was  due in  June  2022.                                                              
She   reiterated   that   the  department   was   monitoring   the                                                              
access agreement closely.                                                                                                       
9:50:14 AM                                                                                                                    
Senator  von  Imhof thought  that  the issue  was  timely  for the                                                              
access  to  landlocked   leases.  She  questioned   the  incentive                                                              
for  available  state  land  to be  leased  that  was challenging                                                               
to  access.  She  thought  access   was  becoming  a  problem  for                                                              
companies trying access parcels in a timely manner.                                                                             
Commissioner    Feige   mentioned   that   the   nuance   of   the                                                              
situation  was  because  this  was  the  first  time  a party  was                                                              
developing   a  new  field  that   was  not  a  working   interest                                                              
owner  in  the unit.  Historically,   there  had  been co-working                                                               
owners   that    had   been   able   to   work   out   commercial                                                               
arrangements.   She furthered  that  even  in the  instance  where                                                              
companies   needed   to   utilize   facilitates,    a  commercial                                                               
arrangement   had been  reached.  She  thought  it  was  important                                                              
to  know  that   there  was  no  exclusivity   in  access   across                                                              
state  leases.   She stated   that  the  language  in  the  leases                                                              
and  unit  agreements  spelled  out  that  other  operators  would                                                              
be able  to  cross because  there  was  no exclusive  use  granted                                                              
to   the   lessor.   She   said   that   through    statutes   and                                                              
regulation  there  was  a path  for the  state  when negotiations                                                               
9:53:15 AM                                                                                                                    
Senator   Wielechowski   understood   that  typically   the  state                                                              
should  take  a  "light  hand"  in  involvement   in negotiations                                                               
between   private  companies.   He  hoped  the   state  would  get                                                              
involved and encourage some sort of settlement.                                                                                 
Co-Chair   Stedman   asked   Commissioner   Feige   to   keep  the                                                              
committee   apprised   of  the   situation   over  the   following                                                              
9:54:17 AM                                                                                                                    
Senator    Wielechowski     reference     Point    Thompson.    He                                                              
understood   that two  years  ago  it  had  been  determined  that                                                              
three   things   had  needed   to  happen   at   Point   Thompson:                                                              
companies  were  to  produce  more  than  10,000/bbl   per  day of                                                              
condensate  oil,  there  was to  be a major  gas  sale at  Prudhoe                                                              
Bay  and was  going to  be a blown  down  of gas  at Prudhoe  Bay.                                                              
He noted  that  none of  those  things had  come  to pass,  and he                                                              
was curious why a new settlement agreement was signed.                                                                          
Commissioner    Feige    thought    Senator    Wielechowski    was                                                              
referencing   the letter  agreement   signed  under  the  previous                                                              
administration,   previous   DNR  commissioner,   and  the  owners                                                              
and  operators  of Point  Thompson.  She  shared  that the  letter                                                              
agreement   expanded   the  trigger   date  within  the   original                                                              
Point  Thomson  settlement   agreement,   which  at the  time  was                                                              
intended  to  give  more time  for  negotiation  for  a major  gas                                                              
sale.  She offered  to  provide  a thorough  update  of the  Point                                                              
Thompson settlement agreement.                                                                                                  
Commissioner   Feige  noted  that  the  prior  developer,   Exxon,                                                              
had  made significant   investment  in  high-pressure  compressor                                                               
heads.  She  stated  that the  investment   had led  to  stability                                                              
in  the  maximization   of  liquids   projection.  She   announced                                                              
that  process   was  over  challenging   technical   hurdles,  and                                                              
with   stabilized    production    and   a   new   operator    the                                                              
production   process  had  improved.   She  reiterated   that  the                                                              
department   would  present  the  committee   with  an  update  on                                                              
the project.                                                                                                                    
9:57:14 AM                                                                                                                    
Co-Chair   Stedman   asked   that   the   information   on   Point                                                              
Thompson   be   consolidated    into   a   presentation   by   the                                                              
department.   He  asserted  that  the  state   had  a significant                                                               
financial   stake   in   Point   Thompson   through   distributed                                                               
credits.    He   thought   Senator    von   Imhof    and   Senator                                                              
Wielechowski had brought up some good points.                                                                                   
9:58:39 AM                                                                                                                    
Mr.  Umekwe   considered   slide   6,  "FY   2021  SUMMARY:   COOK                                                              
      Highlights (FY2021 vs FY2020)                                                                                           
           ?Oil from the Cook Inlet basin critical to the                                                                       
           supply of in-state refineries, as well as                                                                            
           yielding revenues from Royalty-in-Kind sales                                                                         
           ?Compared to FY2020, in FY2021 Cook Inlet                                                                            
         production decreased by ~22% (~3000 bopd)                                                                              
           ?All fields are generally expected to see a year-                                                                    
           on-year decline                                                                                                      
           ?Redoubt Shoal & McArthur River: Fields were                                                                         
           taken offline in June 2020 due to pandemic-                                                                          
           related price crash. Fields brought back online                                                                      
           in September/October 2021.                                                                                           
Mr.  Umekwe  pointed   to the  graph   on the  top  right  of  the                                                              
slide.   He  said  that   the  fallout   from  the  pandemic   had                                                              
resulted in the 22 percent decrease.                                                                                            
Co-Chair   Stedman  recalled   that  the  tax  structure  in  Cook                                                              
Inlet  terminated  in  2022. He  thought  that the  issue  merited                                                              
10:00:17 AM                                                                                                                   
Senator   von  Imhof   was  interested   in   whether  production                                                               
would  go  up in  2022.  She  wondered  about  demand  and  supply                                                              
reserves.  She  questioned   how  production  would  look  in  the                                                              
future  and  if  the state  needed  to  create  more  demand.  She                                                              
mentioned   an  in-state  bullet  line  fork   Makenzie  Point  to                                                              
Fairbanks.   She  wondered  what  the  state  could  do  to  boost                                                              
production  and  demand  in Cook  Inlet  so that  the state  would                                                              
never have to import gas.                                                                                                       
Mr.  Crowther  thought  Mr.  Umekwe  could  speak  to Senator  von                                                              
Imhof's  questions.   He  added  that the  slide  was  focused  on                                                              
oil production from the basin.                                                                                                  
Mr.  Umekwe stated  that  currently  the  department  had  several                                                              
studies   ongoing  to  better   understand   the  basin.  He  said                                                              
that   gas   was   being   studies    but   that   most   of   the                                                              
presentation would be based on oil                                                                                              
Senator  von  Imhof  acknowledged   that  she  had  been  thinking                                                              
of  gas  rather   than  oil  and  thought  a  discussion   on  gas                                                              
could take place later.                                                                                                         
Co-Chair  Stedman  thought   Department  of  Revenue  (DOR)  could                                                              
discuss the tax structure of Cook Inlet later.                                                                                  
10:02:40 AM                                                                                                                   
Senator    Wielechowski    shared   concerns    about    declining                                                              
production.  He  understood  that  the  state currently   had zero                                                              
percent  production  taxes  and  zero percent  royalties   in Cook                                                              
Inlet,   and  still  Anchorage   had   the  highest   natural  gas                                                              
prices in North America.                                                                                                        
Mr.  Umekwe  replied  that  the  revenue  sources  book  laid  out                                                              
the  tax structure   for the  basin.  He added  that  prices  were                                                              
publicly available.                                                                                                             
Co-Chair   Stedman  thought   some  of  the  questions   could  be                                                              
directed  to  DOR.  He  contended  that  it  was  not  a high  tax                                                              
structure  that  was  affecting   the  prices.  He  asserted  that                                                              
there  was no  meaningful  oil  tax structure  in  Cook Inlet.  He                                                              
thought that an update on Cook Inlet would be in order.                                                                         
10:04:25 AM                                                                                                                   
Senator  von  Imhof  asked  if  oil  production  stopped  in  Cook                                                              
Inlet whether it would affect gas production.                                                                                   
Mr. Umekwe replied that some of the gas would be affected.                                                                      
He added that much of the gas in the inlet was independent                                                                      
from oil.                                                                                                                       
10:05:15 AM                                                                                                                   
Mr. Umekwe displayed slide 7, " STATUS UPDATE OF KEY FUTURE                                                                     
PROJECTS: NORTH SLOPE:                                                                                                          
      CRU  Fiord West Kuparuk                                                                                                 
      Status: January 2021  6 wells planned                                                                                   
      Status:  January  2022    Extended   reach  drilling  (Doyon                                                            
      26 The Beast)                                                                                                             
      Production Rate Estimates  Reaching ~20,000 BOPD                                                                        
      CRU  CD5 2 Expansion                                                                                                    
      Status:  January   2021     Ongoing  drilling   by  YE  2020                                                            
      after Covid-related interruptions                                                                                         
      Status:  January  2022    Ongoing;  3 injectors  drilled  so                                                            
      far by Nov. 2021                                                                                                          
      Production Rate Estimates  Reaching over 10,000 BOPD                                                                    
      CRU  Narwhal                                                                                                            
      Status: January 2021  N/A                                                                                               
      Status:  January  2022     First  oil  Dec.  2021.  Produced                                                            
      ~1600  BOPD.  More  drilling  expected  from  CD4  to  total                                                              
      ~12 wells  and full  devt   of 20  to 40 wells  from  CD8 in                                                              
      Production  Rate  Estimates      Initial  peak  from  single                                                            
      start-up  well:   1,000  to  5,000   BOPD;  full   peak  DNR                                                              
      estimates >32,000 BOPD.                                                                                                   
      Status: January 2021  GMT2 First oil YE 2021                                                                            
      Status:  January   2022     First   oil  Nov.   2021  (1,326                                                            
      BOPD); 4 wells drilled by Nov 2021.                                                                                       
      Production   Rate   Estimates      Peak   rate:  35,000   to                                                            
      40,000 BOPD; 2022 update: 30,000 BOPD.                                                                                    
      Status:  January  2021    Now planned  for  2-phases;  start                                                            
      of production   (Phase  1: 2025);  To  move  FEED 2021;  FID                                                              
      & 15 percent AK divestment YE2021 through 2022.                                                                           
      Status:   January   2022       Ongoing    FEED;   start   of                                                            
      production  (Phase  1:  2025;  Phase  2  FID expected   by ~                                                              
      2024/2025); Santos/Oil Search Merger completed.                                                                           
      Production  Rate  Estimates    Peak  design  capacity  rate,                                                            
      Phase 1: 80,000 BOPD.                                                                                                     
      Status:  January   2021     Plan   to  submit  Supplemental                                                             
      EIS.  Record  of  decision   achieved;  FEED   FID  expected                                                              
      YE2021. Announced first oil: 2025-2026.                                                                                   
      Status:  January   2022     Addressing  AK  District   Court                                                            
      remand;  likely  to target  a  new BLM  Record  of  Decision                                                              
      anticipated  by  YE2022.  Construction   expected  to  start                                                              
      Q12023. First oil post 2025/2026.                                                                                         
     Production Rate Estimates  Peak rate: 130,000 BOPD                                                                       
10:09:17 AM                                                                                                                   
Mr. Umekwe displayed slide 8, "DNR FALL 2021 PRODUCTION                                                                         
FORECASTING APPROACH; Recap: No Change in methodology from                                                                      
last year's forecast [Fall 2020 Forecast]."                                                                                     
10:09:40 AM                                                                                                                   
Mr. Umekwe looked at slide 9, " DNR FORECAST PROCESS:                                                                           
PROJECTS/POOLS INCLUDED IN FORECAST":                                                                                           
      ?DOG  performed  ground-up   Decline  Curve   forecasts  for                                                            
      all producing  pools (Public).                                                                                          
            Forecast of Current Production uses AOGCC                                                                           
           publicly available data                                                                                              
           ?~37 pools (ANS and CI), producing as of                                                                             
      ?DOG  engaged  with  operators   through  DOR-arranged   in-                                                            
      person and written interviews                                                                                           
      ?20  projects  under   development/under   evaluation   were                                                            
      considered/researched/reviewed (Confidential)                                                                           
           ?Forecast for these projects use confidential                                                                        
           information from operators                                                                                           
           ?Future production from these projects were                                                                          
           adjusted and risked for scope of contribution,                                                                       
           chance of occurrence and start date                                                                                  
      ?No  modifications   in  forecast   approach  between   Fall                                                            
      2020 and Fall 2021 forecasts                                                                                            
10:11:42 AM                                                                                                                   
Mr. Umekwe addressed slide 10, "CATEGORIES OF PRODUCTION:                                                                       
ONGOING/CURRENT VS FUTURE PRODUCTION":                                                                                          
      Ongoing/Current production                                                                                              
      ?Current Production (CP)                                                                                                
           ?Features and considerations:                                                                                        
                 ?Well and facility uptime                                                                                      
                 ?Operator     spending    to    maintain     base                                                              
                 ?Reservoir management                                                                                          
      Future production                                                                                                       
      ?Projects Under Development (UD) and Under Evaluation                                                                   
           ?Rate contribution:                                                                                                  
                 ?Uncertainty in future well performance                                                                        
               ?Uncertainty in project scope                                                                                    
            Project occurrence and timing:                                                                                      
                 ?Uncertainty in timing (incl. outright                                                                         
               project cancellation/deferral)                                                                                   
                      ?Commerciality        risk       (economic,                                                               
                      regulatory etc)                                                                                           
10:13:41 AM                                                                                                                   
Co-Chair  Stedman  asked  whether   the industry   reported  every                                                              
six  months to  one year  on  future capital  spending.   He asked                                                              
for  a  reminder  on  how  the  interaction   worked  between  the                                                              
department and the industry.                                                                                                    
Mr.  Umekwe   explained   that  companies   reported   on  capital                                                              
spending   and  detailed  future  project   plans  to  DOR  annual                                                              
basis, which DNR used in the forecast.                                                                                          
Co-Chair   Stedman  asked   how  far  out  into   the  future  did                                                              
companies report.                                                                                                               
Mr.  Umekwe stated  that  the  typical  range of  information  was                                                              
10-years out.                                                                                                                   
Co-Chair  Stedman  asked  whether  it would  be  more accurate  to                                                              
project  spending  trends  out 6  months  to 1 year,  rather  than                                                              
10 years.                                                                                                                       
Mr.  Umekwe  answered   in the  affirmative.   He  said  that  the                                                              
near-term provided a clearer projection.                                                                                        
10:15:08 AM                                                                                                                   
Senator  Wielechowski   asked whether  there  were  any fields  or                                                              
developments   that  were  getting  royalty  relief   or that  had                                                              
requested royalty relief.                                                                                                       
Co-Chair  Stedman   reminded  that  royalties   were  within  DNR,                                                              
while other tax structures were within DOR.                                                                                     
Mr. Umekwe offered to provide information later.                                                                                
Co-Chair   Stedman   asked   about   the  interest   DNR   had  in                                                              
requesting information pertaining to royalty relief.                                                                            
Mr. Crowther agreed to provide the information.                                                                                 
Co-Chair  Stedman   explained  that  the  royalty   relief  option                                                              
had  been on  the books  for  many  years.  He added  that  it was                                                              
not  related  to oil  tax  structure  changes  that  had  occurred                                                              
over the last 15 years.                                                                                                         
10:17:18 AM                                                                                                                   
Senator    Wielechowski    recalled   that   the    governor   had                                                              
requested  $199  million   in cash  credits  in  FY  23. He  asked                                                              
whether  there  had  been an  analysis  of  production  return  on                                                              
the cash credits.                                                                                                               
Co-Chair   Stedman   thought   the   question   would  be   better                                                              
directed   to  DOR.   He  suggested   that   Mr.  Umekwe   or  Mr.                                                              
Crowther answer the question to their capabilities.                                                                             
Mr.  Umekwe  thought  DOR  could  more appropriately   answer  the                                                              
Co-Chair   Stedman  reminded   the  committee   that  all  credits                                                              
were  not equal  and  were  targeted  at  different  fields  under                                                              
different ownerships.                                                                                                           
10:19:18 AM                                                                                                                   
Mr.   Umekwe    advanced    to   slide    11,   "MAJOR    PROJECTS                                                              
[UNDEREVALUATION/DEVELOPMENT]      CONSIDERED    IN    FALL   2021                                                              
   Generalized characteristics                                                                                                  
      • Projects that were not online as at end of FY2021                                                                       
        (data cut-off date of 6/2021)                                                                                           
      • Higher risk factors than currently producing fields                                                                     
      • Known discoveries with identifiable operators                                                                           
      • Require major investments                                                                                               
Mr.  Umekwe   relayed   that  the   yellow   represented   federal                                                              
land,   pink   represented    Native    owned   land,   and   blue                                                              
represented   state-owned   land.  He  reiterated   that  not  all                                                              
oil  was  the   same,  and  that  oil   produced  from   different                                                              
projects   in  different  segments   of  the  state   resulted  in                                                              
different   amounts  of  royalties  and  worked  under   different                                                              
production   taxes.  He  said  that  the  projects  on  the  chart                                                              
were  meant  to  provide  an  outlook  over  a 10-year   timespan.                                                              
He  said   that  only   discoveries   were   considered   for  the                                                              
10:21:43 AM                                                                                                                   
Co-Chair  Bishop   asked  if Commissioner   Feige  had  an  update                                                              
on the Liberty development.                                                                                                     
Commissioner   Feige   recalled  that   the  Liberty  development                                                               
sat  in federal  waters,  and  there had  been a  legal  challenge                                                              
to  the permits.   The  9th Circuit  Court  of  Appeals  had  made                                                              
the  determination    that  Liberty   had   to  go  back   to  the                                                              
beginning   of  the  permitting  process.   She  agreed  to  check                                                              
with   LAW   and   get   back   to   the   committee   with   more                                                              
Co-Chair   Stedman   asked  Commissioner    Feige  to   include  a                                                              
historical synopsis of the project.                                                                                             
Commissioner Feige agreed to provide the information.                                                                           
10:23:45 AM                                                                                                                   
Senator   Wilson  asked  whether   the  department   had  seen  an                                                              
increase or decrease in new or ongoing projects.                                                                                
Commissioner    Feige  relayed   that   the  previous    year  the                                                              
department    had   seen    application    for   4    new   units;                                                              
applications for 2 new until had been received in 2022.                                                                         
Mr.  Crowther  commented  that the  map  on slide  11 showed  blue                                                              
outlined   blocks  that  indicated   leases   that  were  not  yet                                                              
unitized  nor  part  of  a developing   field.  He said  that  the                                                              
lease   positions   were   new  and   reflected   new  geological                                                               
10:26:02 AM                                                                                                                   
Mr.   Umekwe   showed   slide   13,  "FALL   2021:   NORTH   SLOPE                                                              
ANNUALIZED FORECAST":                                                                                                           
      Short Term:                                                                                                               
        • DNR forecasts FY2022 annualized average daily                                                                         
           statewide production at 500 MBOPD, and North                                                                         
           Slope production at 492 MBOPD, with a range of                                                                       
           430 MBOPD and 555 MBOPD                                                                                              
      Long term:                                                                                                                
        • Long term forecast reliability is gauged by                                                                           
           general    ballpark   comparison    between   DNR   and                                                              
           operators'   aggregate  forecasts.   Operators'   long-                                                              
           term   outlook    falls   within    DNR's   long   term                                                              
           forecast range                                                                                                       
        • Specific   differences     are   expected     and   do                                                                
           highlight DNR's ground-up uncertainty analysis on                                                                    
           all included projects                                                                                                
        • Outlook on production assumes that operators'                                                                         
           plans and other project drivers stay unchanged                                                                       
Co-Chair   Stedman  thought   some  of  the  chart   on  slide  13                                                              
could be reflected in the DOR revenue forecast numbers.                                                                         
Mr. Umekwe agreed.                                                                                                              
10:28:41 AM                                                                                                                   
Senator  von  Imhof   asked  Mr.  Umekwe  to  speak  to  the  blue                                                              
line   and  define     operator    and   the  overlay   with   the                                                              
projected numbers.                                                                                                              
Mr.  Umekwe  explained   that  all  the  operators   of  currently                                                              
producing   assets  provided  10-year   projections  to  DOR.  The                                                              
department   plotted  the   numbers  in  an  aggregated   view  to                                                              
investigate   the  long-term   and  compare   DNRs  numbers   with                                                              
those of the operator.                                                                                                          
Senator   von   Imhof   understood   that   there   were   written                                                              
analysis  and  oral interviews   with operators.   She summarized                                                               
that   the   operators   told   DNR   their   projected    capital                                                              
investments,   both   current  and  future   and  the  department                                                               
used  that  information   to  create   a high,   medium,  and  low                                                              
Mr. Umekwe agreed.                                                                                                              
10:30:53 AM                                                                                                                   
Senator  Wielechowski   observed   that  the  operator   forecasts                                                              
tended  to be  optimistic,  and  then  actual production   numbers                                                              
would  come  in  lower.  He pointed  to  the  divergence  in  2029                                                              
and  thought   that  DNR  was  projecting   20,000   barrels  more                                                              
than operators.                                                                                                                 
Mr. Umekwe directed attention to the notes below the chart:                                                                     
      ? Comparison of DNR vs Operator Forecasts across                                                                          
      the same group of NS fields.                                                                                              
    ? Excludes DNR's forecasts for non-producing units;                                                                         
     operators' numbers in charts also excludes not-yet                                                                         
      producing fields.                                                                                                         
10:32:57 AM                                                                                                                   
Senator  Wielechowski   asked   about  the  anticipated   projects                                                              
that would create the 20,000bbl in 2030.                                                                                        
Mr.  Umekwe  listed  Pikka  and  Willow  as  projects  that  would                                                              
add to production numbers.                                                                                                      
Co-Chair  Stedman  thought  that  the committee   could break  the                                                              
issue down into deeper detail in future discussions.                                                                            
10:34:04 AM                                                                                                                   
Mr.   Umekwe  referenced    slide  14,   "ALASKA   STATEWIDE   OIL                                                              
PRODUCTION   FORECASTFALL   2021  EXPECTED   CASE  and CATEGORIES                                                               
OF PRODUCTION,"   which  showed  a graph  entitled  'AK Fall  2021                                                              
Production      Forecast     (Expected      Case):     Production                                                               
Categories.'   The slide  broke  down  production  into  different                                                              
areas.  The blue  section  showed  current  production;   the rust                                                              
color    showed   projects     under   development;     the   grey                                                              
represented projects under evaluation:                                                                                          
      .notdef Current Production (CP) remains backbone of state                                                                 
      production in near and medium term                                                                                        
      .notdef Under Development (UD) segment represents production                                                              
      expected from wells drilled in FY2022                                                                                     
      .notdef Under Evaluation (UE) begins to play a more                                                                       
      significant role in production in the next 5-10 years                                                                     
      .notdef Production outlook depends on several factors                                                                     
    including operators' plans, oil price, fiscal system                                                                        
Mr.  Umekwe  relayed  that  the numbers  from  the  industry  were                                                              
snapshots   in  time  and  as  conditioned  changed,   changes  in                                                              
the outlook would be expected.                                                                                                  
10:35:40 AM                                                                                                                   
Senator  Wilson   wondered  why  the  numbers   for  the  projects                                                              
under  evaluation  were  considered  in  FY 22  and  FY 23  on the                                                              
chart.   He  felt  that   the  production   from  those   projects                                                              
would not factor into the numbers until well after 2023.                                                                        
Mr.  Umekwe  explained   that  the  numbers   did  play  a  bigger                                                              
role  in  future  projections,   there  would  be minor,  or  low,                                                              
volumes in the first fiscal year.                                                                                               
Co-Chair  Stedman  noted  that there  was  a new  firm at  work in                                                              
Prudhoe  Bay  that  was  doing  work on  enhancing   the area.  He                                                              
asked  how  DNR  was  taking   account  of  the  new  interest  in                                                              
Prudhoe  Bay  by  Hilcorp  and  how  would  that  interest  impact                                                              
the chart on slide 14.                                                                                                          
Mr.  Umekwe  responded   that the  current   operator  in  Prudhoe                                                              
Bay   saw  potential   in   the  asset.   He   said  that   during                                                              
technical    conversations    about    plans   for   development,                                                               
operators   described  areas   where  opportunities   existed.  He                                                              
said  that  the  numbers  on the  slide  included  year  out  look                                                              
at  well  that  operators   planned  to  drill  in  the  next  few                                                              
years.   He  said  for  DNR  included   the  outlook   within  the                                                              
asset when generating projections.                                                                                              
10:39:25 AM                                                                                                                   
Co-Chair  Stedman   asked  whether  DNR  had  to increase   future                                                              
expectations   for Prudhoe  Bay  over  the past  few  years  as it                                                              
changed  ownership.    He asked  about  the marginal  difference.                                                               
He  thought  there   had  been  significant  positive   change  in                                                              
Prudhoe Bay.                                                                                                                    
Mr.  Umekwe   thought   another   slide  would   show   5  percent                                                              
growth  in Prudhoe   Bay. He  stated  that  in the  first  year of                                                              
the  new   operatorship   there   had  been   an  improvement   in                                                              
facilitates   and infrastructure.    He shared  that  improvement                                                               
in   drilling   and   other   operating    activities   were   now                                                              
evident. He noted that the decline rate had also improved.                                                                      
Co-Chair  Stedman  recalled  previous  decline  rates  of  2 and 3                                                              
percent.  He  thought   that  the  decline  rates  had  been  very                                                              
predictable   over  the  last  decade.  He  appreciated   the  new                                                              
operatorship   and  investment   and  added  that  decline  was  a                                                              
natural result of an aging field.                                                                                               
10:41:43 AM                                                                                                                   
Senator  Wielechowski   did  not  want  the state  to  get  caught                                                              
in   a  future   situation   that   resulted   in   the   loss  of                                                              
production. He pointed to the UE projects on the slide.                                                                         
Mr.   Crowther   responded   that  the   UD  and   UE  categories                                                               
included  large  fields  that were  several  years  out and  would                                                              
create  a  large  change  in  the  production   profile.  He  said                                                              
that  projects   that  were   not  in  production   or  not  being                                                              
drilled   by  June  30,   2021,  would   be  represented   in  the                                                              
"under  development"  or  "under  evaluation"  categories   of the                                                              
graph.  He  stated  that  the  category  included  a  spectrum  of                                                              
different projects.                                                                                                             
Co-Chair   Stedman  asked  whether   the  chart  could  be  broken                                                              
down  by  field  and project   type  for better   risk adjustment                                                               
by the committee.                                                                                                               
Mr.  Crowther  noted  that  some  of  the  information  was  based                                                              
on confidential discussions with operators.                                                                                     
Co-Chair  Stedman  responded   that  the committee   was aware  of                                                              
the  confidentiality.   He  suggested  a  new  color  of  category                                                              
titled     super-secret     could   be   established    for   such                                                              
10:44:08 AM                                                                                                                   
Senator  Wielechowski   asked whether  there  were  any leases  on                                                              
the  North Slope  that  the department   believed  were not  being                                                              
explored or developed for production.                                                                                           
Co-Chair  Stedman  noted  that the question  was  controversial.                                                                
Mr. Crowther deferred to Commissioner Feige.                                                                                    
Commissioner    Feige   stated    there   were   several    leases                                                              
currently  being  held  that had  not  yet commenced  exploration                                                               
work.  She  furthered   that  over  the  previous   several  years                                                              
the  state had  injected  terms  into the  leases  that  shortened                                                              
the  initial   primary  term.   She  said  that   there  had  been                                                              
analysis  within   the  department  that  showed   an approximate                                                               
7-year  timeframe   from  leasing   to  first  exploration   well.                                                              
She  continued   to  explain  that  the  primary   term  had  been                                                              
shortened,    which    placed   additional    pressure    on   the                                                              
operators    to    prioritize    the    acreage    and    commence                                                              
exploration   before   the   primary   term.   Additionally,   the                                                              
state   had  established    a  significant   escalation    in  the                                                              
annual  per acre  rent.  She said  that  leasees  could apply  for                                                              
a waiver   of the  increased  rent  by  demonstrating  sufficient                                                               
work  or  could  apply   for  an  extension  beyond   the  primary                                                              
term.  She  felt that  all  the new  mechanisms  put  pressure  on                                                              
companies  to  work  the acreage  in  a meaningful   way that  led                                                              
to  discovery.  She  did  not  believe  that  any  companies  were                                                              
currently warehousing any acreage.                                                                                              
10:47:29 AM                                                                                                                   
Senator  Wielechowski   wanted  to see  a  list of  operators  and                                                              
what   had   been    leased,   and    details   on   exploration,                                                               
production,   and  development   of  projects.    He  thought  the                                                              
committee  would   benefit  from  the  information.  He  had  seen                                                              
fields  that  were   extremely  profitable,   and  the  state  was                                                              
giving  out tax  breaks,  deductions,   and credits  to  companies                                                              
for simply doing their job.                                                                                                     
Commissioner   Feige   stated  that   the  list  of   lessors  was                                                              
available   on  DNR's  Division   of Oil   and  Gas  website.  She                                                              
said  that  she could  investigate,   by company,   the work  that                                                              
had been done on the leases.                                                                                                    
Co-Chair  Stedman   asked  for  the commissioner's    help on  the                                                              
matter.  He noted  that  newer  leases  had clauses  to  encourage                                                              
develop sooner than later. He asked about older leases.                                                                         
Commissioner Feige answered affirmatively.                                                                                      
10:49:37 AM                                                                                                                   
Mr.  Umekwe went  back  to slide  14 and  noted  that some  of the                                                              
projects  would  include  projects   like the  GMT2  project  that                                                              
had  just come  online  and  would  be included  in  the grey  bar                                                              
beginning in 2022.                                                                                                              
Co-Chair  Stedman  asked  for the  information  to  be in  another                                                              
format   to  include  2025  and   2026.  He  thought   this  would                                                              
provide further clarity.                                                                                                        
10:50:12 AM                                                                                                                   
Mr.   Umekwe  turned   to   slide  15,   "FALL   2021  PRODUCTION                                                               
        • DNR   Forecast    continues    to    use   the    best                                                                
           information    available   to  DNR/DOR,   to   generate                                                              
           production   outlook   for   oil  fields   within   the                                                              
           state,  with  a  focus  on generating   accurate  near-                                                              
           term, and realistic long-term, forecasts.                                                                            
        • Fall 2021 Forecast is a static view on                                                                                
           production;    DNR's  outlook   is   updated   annually                                                              
           (Fall  and  Spring)  to  incorporate   latest  operator                                                              
           plans   and  the   State's   official   updated   price                                                              
        • DNR's Fall 2021 outlook shows mean annual                                                                             
           production  of  approximately   500 MBOPD  across  much                                                              
           of   the  outlook   period,   based   on  the   current                                                              
           snapshot of operators' plans.                                                                                        
        • Production    from    projects    under    evaluation                                                                 
           reflects   uncertainty  in  operators'   plans  towards                                                              
           return  to  pre-pandemic   activity  levels,   specific                                                              
           project   uncertainties,   as  well  as  project  scope                                                              
           and timing risks.                                                                                                    
Mr.  Umekwe  explained  that  the slide  was  a  summarization  of                                                              
the presentation.                                                                                                               
10:52:08 AM                                                                                                                   
Mr. Umekwe showed slide 16, "THANK YOU":                                                                                        
      Thank  you  on behalf   of  the DOG  Fall  2021  Production                                                               
      Forecasting  Core  Team:  John Burdick,  Linda  Liu,  Travis                                                              
      Peltier,  Shaun   Peterson,  Chalinda   Weerasinghe,   Glenn                                                              
      Lau, Maduabuchi Pascal Umekwe, Ph.D.                                                                                      
10:52:14 AM                                                                                                                   
Senator   Wilson   asked  what   the  legislature   could   do  to                                                              
assist  DOR  and DNR  to get  first  oil  as quickly  as  possible                                                              
for some of the current projects.                                                                                               
Mr.   Crowther    thought    there   were   several    pieces   of                                                              
legislation   that  the  department  had  introduced.   He  stated                                                              
there  was  a  tremendous  effort   ongoing  by  DNR  to  actively                                                              
manage  leases   to  promote  development.   There  was  a  robust                                                              
effort   underway  through   the  appropriations   and   authority                                                              
given   by  the   legislature.    There   was  a   very   dynamic,                                                              
uncertain,   and  competitive    global  environment,    which  he                                                              
hoped the committee would consider.                                                                                             
Co-Chair Stedman thanked the presenters. He thought that a                                                                      
combine meeting with DNR and DOR could be fruitful as the                                                                       
legislature worked to close the structural deficit.                                                                             
Co-Chair Stedman discussed housekeeping.                                                                                        
10:54:46 AM                                                                                                                   
The meeting was adjourned at 10:54 a.m.                                                                                         

Document Name Date/Time Subjects
DNR Fall 2021 Production Forecast_Senate.pdf SFIN 1/19/2022 9:00:00 AM
DNR Production Forecast
011922 DNR Respose to Questions 2022-01-28_Production Forecast Presentation_Response to Committee_Final.pdf SFIN 1/19/2022 9:00:00 AM