Legislature(2001 - 2002)
05/10/2002 03:50 PM Senate RES
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE RESOURCES COMMITTEE
May 10, 2002
3:50 p.m.
MEMBERS PRESENT
Senator John Torgerson, Chair
Senator Gary Wilken, Vice Chair
Senator Ben Stevens
Senator Georgianna Lincoln
MEMBERS ABSENT
Senator Rick Halford
Senator Robin Taylor
Senator Kim Elton
COMMITTEE CALENDAR
HOUSE BILL NO. 527
"An Act relating to entry into the Minto Flats State Game Refuge
for purposes of exploration and development of oil and gas
resources."
MOVED SCS HB 527(RES) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
HB 527 - No previous action to consider.
WITNESS REGISTER
Representative Hugh Fate
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of HB 527.
Mr. Jim Haynes, Lease Administrator
Division of Oil and Gas
Department of Natural Resources
550 W 7th Ave Ste 400
Anchorage AK 99501
POSITION STATEMENT: Supported HB 527.
Mr. Mark Myers, Director
Division of Oil and Gas
Department of Natural Resources
550 W 7th Ave Ste 800
Anchorage AK 99501-3560
POSITION STATEMENT: Commented on HB 527.
Mr. Chip Dennerlein, Director
Division of Habitat and Restoration
Department of Fish & Game
PO Box 25526
Juneau, AK 99802-5226
POSITION STATEMENT: Commented on HB 527.
ACTION NARRATIVE
TAPE 02-30, SIDE A
Number 001
HB 527-MINTO FLATS GAME REFUGE
CHAIRMAN JOHN TORGERSON called the Senate Resources Committee
meeting to order at 3:50 p.m. and announced HB 527 to be up for
consideration.
REPRESENTATIVE HUGH FATE, sponsor of HB 527, said the genesis of
the bill was a series of communications, which were documented in
an April 12 preliminary finding by the Department of Natural
Resources (DNR) that said the ability to explore and develop in
the Minto Flats Game Refuge would not be licensed. The Refuge
covers a core area in the Nenana Basin, which really is at the
heart of that game refuge. He explained that about 20 years ago
two test holes in that area identified an extremely high
potential for gas at 18,000 - 20,000 feet. Because of the
confusion of the communications that passed between the Alaska
Department of Fish and Game (ADF&G) and DNR and the letter from
ADF&G to the Chairman of the Chamber of Commerce, it came to his
attention that the possibility of even exploration on the Minto
Flats Game Refuge, where most of the core area exists, would
perhaps be denied. The Commissioner of ADF&G said he felt there
was confusion. In the meantime, this bill contains language from
the two other existing state game refuges of Trading Bay and
Susitna that allow for exploration.
He said that sidebars to protect the environment are in place.
There can't be any kind of exploration or development without
those parameters that really describe strict environmental terms
for exploration and development. The record shows that a good
public hearing process took place, but people still do not want
their land, trap lines and allotments disturbed.
MR. JIM HAYNES informed members that he held a position within
the Division of Oil and Gas, DNR. His specific job duty was the
supervision of the permitting land section. He told members he
then worked at Doyon for several years, and recently he has
worked with Nenana in Minto to encourage exploration in the Minto
Flats area. He said he has been involved in public meetings in
both communities and it is his understanding that they endorse
the project. He pointed out the land in question was selected by
the state for its oil and gas potential long before the Refuge
existed. He said the existing Refuge plan contains language that
is contrary to what was agreed upon by the Commissioners of DNR
and ADF&G. The unapproved change is the reason for some of
today's problems. He said he would like to see the language in
the Refuge plan changed to reflect the outcome of these hearings,
whatever that may be.
MR. HAYNES said that he testified briefly before a House
committee last week in favor of providing service access to the
area. Following his testimony, Ken Boyd, past director of the
division, made a statement that he feels warrants expansion. Mr.
Boyd said the effect of this is that his clients are expressing
disdain at the hurdles they face at the permitting stage. Mr.
Haynes said he believes the permitting problems are getting
worse. [Mr. Haynes' description of the permitting problems was
indiscernible due to background noise.] He said that each
activity, be it the erection of a light pole, requires written
approval. That allows the approving entities an additional
opportunity to add new stipulations. He said the most onerous
stipulation drives the project, and that tends to redirect the
management authority from one agency to another, well beyond
their statutory authority.
MR. HAYNES said he has spent the last 12 years challenging what
he thought were unnecessary and expensive state regulations. [The
remainder of Mr. Haynes' testimony was inaudible.]
MR. MARK MYERS, Director, Division of Oil and Gas, DNR, said this
is an area that has long been understood to have a lot of
potential for hydrocarbons. Seismic data has been shot for part
of the basin and gravity data has been collected from the other
part of the basin. [The next portion of Mr. Myers' testimony
described the geology of the area but was indiscernible.] He then
said the gas basin, until recent times, had neither the economics
nor the interest. With gas prices increasing and the need for
[indisc.] in Fairbanks, this particular basin has become an
attractive target. DNR believes that gas recovered there could
be produced economically based on the increased demand for energy
in Fairbanks. DNR is aware that because a state game refuge
overlies a high potential area, it recognizes the conflict in
resource values. The area in question, north of the river, is
currently managed by ADF&G and DNR so a joint decision has to be
made.
CHAIRMAN TORGERSON asked if the surrounding communities were
supportive of drilling when DNR did its best interest finding and
held public hearings.
MR. MYERS replied that they held three meetings - in Nenana,
Minto and Fairbanks. All three were well attended. People were
primarily concerned about access and that a pipeline or new roads
into the area might provide additional hunting and subsistence
areas. Minto residents very much wanted a dam and hoped there
will be a pipeline to their village. In Fairbanks, the testimony
was overwhelmingly in support of the project. Testimony in Nenana
was similar to that given in Fairbanks.
CHAIRMAN TORGERSON asked if he knew of any endangered species in
this area.
MR. MYERS replied that ADF&G has not said there are any
endangered species in the area. The area primarily has migratory
waterfowl and moose habitat and is similar to the Kenai Game
refuge in terms of the habitat.
CHAIRMAN TORGERSON read him a statement from ADF&G's findings and
asked him if it was true or false:
'Using a combination of directional drilling, staging
through state lands [and] the Tanana Valley State
Forest, located on both the east and west sides of the
Refuge, staging from non-core lands left open to
surface occupancy, we believe most, if not all, of the
potential oil and gas targets could be developed.'
MR. MYERS replied that it is false in a sense of being the
[indisc.] on the peripheral edges of the license area outside of
the Refuge. This is a very large land area, perhaps 250,000
acres. They would need a substantial setback from the Tanana
River and to be able to drill under it. It just wouldn't be
practical.
CHAIRMAN TORGERSON asked him if this bill passes, how it will
change life for him in relation to Minto Flats.
MR. MYERS replied that the bill does two things. It clarifies
that oil and gas are a priority on the Refuge although oil and
gas exploration and development were never prohibited. However,
it still leaves the lessees with a large amount of uncertainty
that the state agencies will, in fact, work out an accessible
arrangement so that exploration can take place. He said there are
two levels of risk of geologic and commercial success and
[indisc.]. He didn't think there would be the need for many wells
to demonstrate commerciality, but he didn't think it added
confidence to the explorer. [Most of Mr. Myer's testimony was
barely audible.]
MR. CHIP DENNERLEIN, Director, Division of Habitat and
Restoration, ADF&G, said ADF&G's greatest concern is in the area
north of the Minto Game Refuge. Attention to this area predates
the establishment of the Refuge. State planning efforts years ago
noted the biggest area for wildlife productivity was in the
Nenana Basin plains. Public use is also of issue. This area has
the highest waterfowl harvest in all of Alaska. It is an
extensive network of lakes, ponds and interconnected wetlands.
Oil and gas development is allowed in the Refuge as long as it is
compatible with fish and wildlife protection.
MR. DENNERLEIN said the issue is access to the northern area. He
would divide the question into three areas. One is that an
exploration company needs access for exploration and ADF&G
doesn't see that as a problem. There are techniques that can deal
with that and secondly, drilling, development and maintenance of
the gas production, which is much more limited in scope than oil.
If the core area north of the river was included, they want a
heads up because there are areas that could be off-limits and
require special management, although he admitted to some
confusion, which has been straightened out. "We did not mean this
as a huge blanket prohibition."
MR. DENNERLEIN said that Doyon, the largest landowner up there,
indicated their willingness to work things out in a letter they
sent to Representative Coghill.
CHAIRMAN TORGERSON said he wasn't sure that the departments
talked to each other and:
The damage has already been done on this. Because you
issued your best interest finding already with your
license advisory statement in there that says you can't
have any surface entry on an area that is 277,000
acres. That reminds me of someone who didn't even go
look. I've been over that area and flown over that area
and you can't take the whole damn thing off limits with
a blank statement like that. So, going around and
meeting with a few people and trying to correct a grave
error I don't think works. I think you guys screwed up
majorly or we wouldn't need this bill in front of us
now. I suggest that you read your work before you lease
it….
MR. DENNERLEIN said they were dealing with Doyon and he believed
they could work things out with them. He said they should have
written this together (DNR and ADF&G) rather than having comments
back and forth. He noted, "There is no reason we can not make it
work."
CHAIRMAN TORGERSON said he wasn't coming back next year, but he
was telling his colleagues that the first bill they should put in
should transfer all the functions of Title 16 to the Division of
Oil and Gas. He surmised, "Then I know you guys would talk."
CHAIRMAN TORGERSON proposed to put a "," after "permitted" on
line 6 and delete "when compatible" and insert "unless a person
demonstrates on the basis of sound science that exploration and
development is incompatible" and then would go on to read, "with
the purposes specified in subsection (b) of the section."
SENATOR WILKEN moved amendment 1 as stated by the Chairman.
SENATOR LINCOLN objected to say that she was comfortable with
"shall be permitted when compatible" and then she looked at what
the compatibility would be under section (b), but now to say
"unless a person" seemed to be more of a person "opting out" than
"opting in."
She asked if there was a pipeline through the village of Minto,
then with this amendment they would have to demonstrate on the
basis of sound science that it would not be incompatible. Her
concern is that the people would lose their ability to harvest
fish and game in an area they traditionally use.
CHAIRMAN TORGERSON said he hoped that wouldn't happen.
SENATOR LINCOLN noted that there is a five-mile corridor on
either side of the pipeline where people cannot hunt, trap or
fish and that is a real concern of theirs.
CHAIRMAN TORGERSON said he could see her point and asked
Representative Fate what he thought about the amendment.
REPRESENTATIVE FATE said he shared their concern, but he thought
there should be some way to mitigate that divisiveness.
CHAIRMAN TORGERSON announced an at-ease from 4:30 to 4:32 while
they worked it out.
SENATOR LINCOLN moved to amend amendment 1 to insert "or
traditional knowledge," after "science". There were no objections
and the amendment to amendment 1 was adopted.
CHAIRMAN TORGERSON asked if Representative Fate supported
amendment 1 as amended. He said he supported it.
CHAIRMAN TORGERSON asked if there were any objections to adopting
amendment 1 as amended. There were no objections and it was so
ordered.
SENATOR WILKEN moved to pass SCS HB 527(RES) from committee with
individual recommendations and attached fiscal note. There were
no objections and it was so ordered.
CHAIRMAN TORGERSON adjourned the meeting at 4:33 p.m.
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