Legislature(2009 - 2010)Anch LIO Rm 220

09/21/2010 10:00 AM Senate RESOURCES


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Audio Topic
10:07:14 AM Start
10:07:45 AM Overview: Status of Alaska's Oil Spill Preparedness and Response Capability
03:14:03 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview: Status of Alaska's oil spill TELECONFERENCED
preparedness and response capability
-- Testimony <Invitation Only> --
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                       September 21, 2010                                                                                       
                           10:07 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Lesil McGuire, Co-Chair                                                                                                 
Senator Bill Wielechowski, Co-Chair                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Charlie Huggins, Vice Chair                                                                                             
Senator Hollis French                                                                                                           
Senator Bert Stedman                                                                                                            
Senator Gary Stevens                                                                                                            
Senator Thomas Wagoner                                                                                                          
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Representative Bill Stoltze                                                                                                     
Representative Dave Guttenberg                                                                                                  
Representative Carl Gatto                                                                                                       
Representative Craig Johnson                                                                                                    
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
Overview: Status of Alaska's Oil Spill Preparedness and Response                                                                
Capability                                                                                                                      
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
MARILYN CROCKETT, Executive Director                                                                                            
Alaska Oil and Gas Association (AOGA)                                                                                           
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Commented on the status of Alaska's oil                                                                   
spill preparedness and response capability.                                                                                     
                                                                                                                                
BECKY SILVES, HSE, Alaska Drills and Training Coordinator                                                                       
ConocoPhillips Alaska                                                                                                           
Anchorage, AK                                                                                                                   
POSITION  STATEMENT:  Commented on  the  status  of Alaska's  oil                                                             
spill preparedness and response capability.                                                                                     
                                                                                                                                
PETE SLAIBY, General Manager                                                                                                    
Shell Alaska                                                                                                                    
POSITION  STATEMENT:  Commented on  the  status  of Alaska's  oil                                                             
spill preparedness and response capability.                                                                                     
                                                                                                                                
DR. JEFF SHORT, Pacific Science Director                                                                                        
Oceana Alaska                                                                                                                   
Alaska                                                                                                                          
POSITION  STATEMENT:  Commented on  the  status  of Alaska's  oil                                                             
spill preparedness and response capability.                                                                                     
                                                                                                                                
LOIS EPSTEIN, P.E.                                                                                                              
Arctic Program Director                                                                                                         
The Wilderness Society                                                                                                          
Alaska                                                                                                                          
POSITION  STATEMENT:  Commented on  the  status  of Alaska's  oil                                                             
spill preparedness and response capability.                                                                                     
                                                                                                                                
NANCY WAINWRIGHT, Senior Staff Attorney                                                                                         
Trustees for Alaska                                                                                                             
Alaska                                                                                                                          
POSITION  STATEMENT:  Commented on  the  status  of Alaska's  oil                                                             
spill preparedness and response capability.                                                                                     
                                                                                                                                
HAROLD CURRAN, CEO, speaking for Mayor Edward Itta                                                                              
North Slope Borough                                                                                                             
Alaska                                                                                                                          
POSITION  STATEMENT:  Commented on  the  status  of Alaska's  oil                                                             
spill preparedness and response capability.                                                                                     
                                                                                                                                
MIKE MUNGER, Executive Director                                                                                                 
Cook Inlet Regional Citizens Advisory Council                                                                                   
Alaska                                                                                                                          
POSITION  STATEMENT:  Commented on  the  status  of Alaska's  oil                                                             
spill preparedness and response capability.                                                                                     
                                                                                                                                
MARK SWANSON, Executive Director                                                                                                
Prince William Sound Regional Citizens Advisory Council (RCAC)                                                                  
Alaska                                                                                                                          
POSITION  STATEMENT:  Commented on  the  status  of Alaska's  oil                                                             
spill preparedness and response capability.                                                                                     
                                                                                                                                
COMMISSIONER LARRY HARTIG                                                                                                       
Department of Environmental Conservation (DEC)                                                                                  
Anchorage, AK                                                                                                                   
POSITION  STATEMENT:  Commented on  the  status  of Alaska's  oil                                                             
spill preparedness and response capability.                                                                                     
                                                                                                                                
LARRY DIETRICK, Director                                                                                                        
Division of Spill Prevention and Response                                                                                       
Department of Environmental Conservation (DEC)                                                                                  
Anchorage, AK                                                                                                                   
POSITION  STATEMENT:  Commented on  the  status  of Alaska's  oil                                                             
spill preparedness and response capability.                                                                                     
                                                                                                                                
DAN SEAMOUNT                                                                                                                    
Geologic Commissioner and chair                                                                                                 
Alaska Oil and Gas Conservation Commission (AOGCC)                                                                              
Anchorage, AK                                                                                                                   
POSITION  STATEMENT:  Commented on  the  status  of Alaska's  oil                                                             
spill preparedness and response capability.                                                                                     
                                                                                                                                
CATHY FOERSTER, Engineering Commissioner                                                                                        
Alaska Oil and Gas Conservation Commission (AOGCC)                                                                              
Anchorage, AK                                                                                                                   
POSITION  STATEMENT:  Commented on  the  status  of Alaska's  oil                                                             
spill preparedness and response capability.                                                                                     
                                                                                                                                
KEVIN BANKS, Director                                                                                                           
Division of Oil and Gas                                                                                                         
Department of Natural Resources (DNR)                                                                                           
Anchorage, AK                                                                                                                   
POSITION  STATEMENT:  Commented on  the  status  of Alaska's  oil                                                             
spill preparedness and response capability.                                                                                     
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
10:07:14 AM                                                                                                                   
                                                                                                                                
CO-CHAIR  WIELECHOWSKI  called   the  Senate  Resources  Standing                                                             
Committee meeting to order at 10:07 a.m.                                                                                        
                                                                                                                                
^Overview:  Status   of  Alaska's  oil  spill   preparedness  and                                                               
response capability                                                                                                             
 Overview: Status of Alaska's oil spill preparedness and response                                                           
                           capability                                                                                       
                                                                                                                              
10:07:45 AM                                                                                                                   
CO-CHAIR WIELECHOWSKI said  the idea to hold a  meeting to assess                                                               
Alaska's oil spill preparedness  and response capability arose in                                                               
the wake  of the Deepwater Horizon  spill in the Gulf  of Mexico.                                                               
In  light of  that disaster,  it  seems only  prudent to  examine                                                               
Alaska's laws, regulations, policies,  and budgets to ensure that                                                               
we have the  best possible regulatory structure  in place. Alaska                                                               
has billions  of barrels of  oil and  trillions of cubic  feet of                                                               
natural  gas sitting  on  the Outer  Continental  Shelf (OCS)  in                                                               
Alaska  and on  state and  federal  lands onshore.  If we  cannot                                                               
convince  the  federal  government  that we  have  the  strongest                                                               
regulatory  structure and  response capability  in place  we will                                                               
not be able to see those lands opened up for exploration.                                                                       
                                                                                                                                
He  said  that  both  he  and Senator  McGuire  are  both  strong                                                               
supporters of additional oil development  in Alaska, both on- and                                                               
off-shore.   Oil production  produces roughly  85 percent  of the                                                               
state's  unrestricted revenue,  providing funding  for education,                                                               
public  safety,   roads,  and  other  essential   services.  Yet,                                                               
production is  declining. The  Trans-Alaska Pipeline  (TAPS) once                                                               
carried 2.1 million barrels of oil every  day.  It is now down to                                                               
671,000. He said:                                                                                                               
                                                                                                                                
     This  reality must  lead us  all to  ask if  we are  to                                                                    
     encourage  more oil  production in  Alaska, how  can we                                                                    
     ensure that it is done  in the safest way possible. How                                                                    
     can  we  minimize  impacts   on  other  industries  and                                                                    
     aspects of Alaska's economy, on our fish and wildlife?                                                                     
                                                                                                                                
CO-CHAIR WIELECHOWSKI said they  had assembled four expert panels                                                               
to help answer  these critical questions. He thanked  each of the                                                               
panelists  for participating  today and  thanked them  in advance                                                               
for any recommendations they might  provide that will help ensure                                                               
that oil development in Alaska  proceeds in the least risky, most                                                               
sustainable manner possible.                                                                                                    
                                                                                                                                
CO-CHAIR  WIELECHOWSKI  asked Co-Chair  McGuire  if  she had  any                                                               
opening thoughts.                                                                                                               
                                                                                                                                
10:09:16 AM                                                                                                                   
CO-CHAIR  MCGUIRE echoed  Senator Wielechowski's  sentiments that                                                               
they wanted to  give time for the experts in  the Gulf to contain                                                               
the oil spill  so that these hearings wouldn't be  a catalyst for                                                               
more controversy,  as well as the  fact that some of  the experts                                                               
would have  been busy responding to  it. She said that  she looks                                                               
forward to  a future  where Alaska  continues to  do it  the very                                                               
best,  and  Prudhoe  Bay  is  that world  class  example  of  how                                                               
resources  can  be developed  in  an  environmentally sound  way.                                                               
Alaska is  held out across the  world as a global  leader; and we                                                               
want to be a  model for OCS development as well.  The OCS is much                                                               
different  than what  is  being dealt  with in  the  Gulf; it  is                                                               
shallower-only  a  couple hundred  feet  in  some cases,  it  has                                                               
Arctic ice  and whale migration, and  indigenous populations that                                                               
depend on  that very delicate  region of the world.  Alaska wants                                                               
to do  it right. She and  Senator Wielechowski hoped to  create a                                                               
base foundation  today for continued  dialogue with  industry and                                                               
with the executive  branch. The panel idea is a  good one as they                                                               
don't want to  go forward with one theme. They  tried to create a                                                               
fair and balanced process to  allow each discussion to take place                                                               
divided into industry, environment, community and the agencies.                                                                 
                                                                                                                                
She recognized Representative Craig Johnson in attendance.                                                                      
                                                                                                                                
CO-CHAIR  WIELECHOWSKI announced  that the  industry panel  would                                                               
have three  presenters: Marilyn Crockett from  AOGGA, followed by                                                               
Becky  Silves  of  ConocoPhillips,  and Pete  Slaiby  from  Shell                                                               
Alaska.  Each panelist  would have  about 10  minutes to  provide                                                               
their assessment of Alaska's oil  spill preparedness and response                                                               
capability and offer any recommendations for improving it.                                                                      
                                                                                                                                
10:12:31 AM                                                                                                                   
MARILYN  CROCKETT,   Executive  Director,  Alaska  Oil   and  Gas                                                               
Association (AOGA),  said this  is an  appropriate first  step to                                                               
having an ongoing dialogue on this issue.                                                                                       
                                                                                                                                
MS.  CROCKETT  said her  presentation  would  be focused  on  the                                                               
importance of prevention in terms  of oil industry operations and                                                               
capabilities currently in place for  responding to a spill if one                                                               
does occur.                                                                                                                     
                                                                                                                                
She said  the State  of Alaska  has long  been recognized  as the                                                               
leader in oil spill and  hazardous substance spill prevention and                                                               
response laws and  regulations. A large number  of personnel were                                                               
deployed from  Alaska to assist  in the Gulf of  Mexico response.                                                               
She stated:                                                                                                                     
   • Prevention is the key. The AOGCC is the agency that is                                                                     
     responsible for the "down hole" activities; they regulated                                                                 
     the oil and gas industry on blow out prevention equipment                                                                  
     (BOPE).                                                                                                                    
   • AOGCC requires BOPE be tested:                                                                                             
        - No greater than every 14 days for development wells                                                                   
        - Every 7 days for exploration wells & workover wells                                                                   
   • 98 percent component pass rate for BOPEs over the past four                                                                
     or five years                                                                                                              
   • Since 1968, 7 blowouts from 5,000 wells drilled on the                                                                     
     North Slope (last occurrence 1994)                                                                                         
   • Since 1962, 4 blowouts in Cook Inlet (last occurrence 1987)                                                                
   • All were from loss of control in shallow gas zones                                                                       
   • None resulted in injuries or oil spills                                                                                    
                                                                                                                                
10:16:39 AM                                                                                                                   
MS. CROCKETT  said the  State of Alaska  has 19  approved Primary                                                               
Response  Action Contractors.  Cook  Inlet has  a spill  response                                                               
agency called CISPRI; Prince William  Sound has Alyeska and SERVS                                                               
as well  as the individual  tanker owners; and Alaska  Clean Seas                                                               
(ACS) for the  North Slope. These organizations are  all in place                                                               
in addition to the responsibilities of the individual companies.                                                                
                                                                                                                                
She said the  Alaska Clean Seas has been around  for more than 30                                                               
years and started off as ABSORB and was reconstituted from a co-                                                                
op to  a response  action contractor in  1990. It  is responsible                                                               
for providing  personnel, equipment  and spill  response training                                                               
in  preparing for  and  cleaning up  oil  spills. The  membership                                                               
encompasses companies  operating on  the North  Slope and  in the                                                               
Arctic offshore (OCS);  they have 78 full-time  personnel as well                                                               
as  a great  number of  trained responders  available via  NSSRT,                                                               
ACRT and VRT.                                                                                                                   
                                                                                                                                
ACS inventory  that they  maintain and operate  on behalf  of ACS                                                               
and the companies operating on the North Slope includes:                                                                        
   • $50 million in inventory                                                                                                   
   • 287,184 feet containment boom                                                                                              
   • 160 skimmers (over 19,000 bbls/hr)                                                                                         
   • Eight heli-torch aerial ignition systems                                                                                   
   • 94 vessels                                                                                                                 
   • Two 128 barrel and twelve 249 barrel mini barges                                                                           
                                                                                                                                
MS. CROCKETT  said ACS  provides extensive  training not  only to                                                               
its own personnel,  but also to others on the  North Slope in 580                                                               
Classes in 2009 with 7,310 trainees, and 29,913 student hours.                                                                  
                                                                                                                                
ACS  is  a  leader  in  research and  development  and  has  been                                                               
actively  participating  in  R&D  since the  early  1980's.  They                                                               
participated in the SINTEF program  for oil spill response in ice                                                               
infested and Arctic  waters. They are in the  process of updating                                                               
the Tundra Treatment Manual in  connection with the Department of                                                               
Environmental Conservation  (DEC) on  treatment of  Arctic tundra                                                               
as a  result of  a spill as  well as  airborne ground-penetrating                                                               
radar to detect oil under ice.                                                                                                  
                                                                                                                                
She  said that  any change  to the  state's requirements  need to                                                               
wait  until the  federal efforts  are completed.  It wouldn't  be                                                               
useful  for the  state to  create its  own wheel  without knowing                                                               
what the federal baseline is going to be initially.                                                                             
                                                                                                                                
10:20:46 AM                                                                                                                   
REPRESENTATIVE GATTO  asked how much  money it costs  to purchase                                                               
and install a blow out preventer.                                                                                               
                                                                                                                                
MS. CROCKETT answered that she didn't know.                                                                                     
                                                                                                                                
REPRESENTATIVE  GATTO asked  if it's  possible to  stack them  so                                                               
that the  failure of the  first one  could default to  the second                                                               
one.                                                                                                                            
                                                                                                                                
MS. CROCKETT  indicated yes;  and said that  would be  covered in                                                               
the next presentation.                                                                                                          
                                                                                                                                
REPRESENTATIVE   GUTTENBERG  said   the   Alaska  Department   of                                                               
Environmental Conservation  (DEC)ADEC had  a couple  of programs,                                                               
the  GAP  analysis was  one,  that  took  a  couple of  years  to                                                               
organize, but the national academy  shot it down because industry                                                               
wasn't participating. He hoped they would  do a better job in the                                                               
future,  because  at  the  end  of  the  day  both  industry  and                                                               
government   would  have   a  lot   of  responsibility.   Clearly                                                               
prevention comes first,  but the public expects  a quick response                                                               
to a spill.                                                                                                                     
                                                                                                                                
MS. CROCKETT  responded that  she disagreed  with his  point that                                                               
the  industry wasn't  cooperating. They  were very  interested in                                                               
cooperating, but the  scope of the risk analysis was  too big for                                                               
the  methodology that  was developed.  The  data requested  would                                                               
have filled  this room and the  rooms next door and  it would not                                                               
have been useful  to the contractor. So, the  project was reduced                                                               
and industry has been cooperating.  She didn't know the status of                                                               
the reports.                                                                                                                    
                                                                                                                                
10:25:57 AM                                                                                                                   
BECKY SILVES,  House Safety and Environment  (HSE), Alaska Drills                                                               
and Training  Coordinator, ConocoPhillips Alaska, said  the focus                                                               
of her  testimony would  be on  their offshore  exploration plans                                                               
for the Chukchi  Sea as well as their spill  prevention for those                                                               
activities. ConocoPhillips  has 40 years of  operating experience                                                               
in  the  Alaska  Arctic  as  well as  experience  in  other  high                                                               
latitude areas  such as Norway.  Their Chukchi prospect  is about                                                               
80 miles offshore; the first well  is planned for no earlier than                                                               
2012 and  most likely will  happen later than that  given ongoing                                                               
unresolved litigation and regulatory uncertainties.                                                                             
                                                                                                                                
In order to focus their  prevention activities ConocoPhillips has                                                               
to understand  the environment they  are operating in.  They have                                                               
and will  continue to do  the pre-work  in order to  conduct safe                                                               
exploration  activities; they  have worked  with scientists  from                                                               
the University of Alaska Fairbanks,  as well as industry partners                                                               
with  Shell and  Statoil,  in order  to  implement an  integrated                                                               
environmental  studies  program.  This  program  has  given  them                                                               
insight to the various species  living in their prospect area and                                                               
the  physical oceanography  that  will  affect their  exploration                                                               
activities  -  such  as  air   temperature,  wind  direction  and                                                               
strength, wave height, ocean currents and ice profiling.                                                                        
                                                                                                                                
They plan to drill their  exploration wells during the open water                                                               
season,   which    on   average   is   from    mid-July   through                                                               
October/November and they plan to  drill where there is a history                                                               
of no ice. However if there  is ice, they have developed a system                                                               
for managing and  responding to ice in the area.  Their ice alert                                                               
system which  requires approval from  the Bureau of  Ocean Energy                                                               
Management, Regulation  and Enforcement (BOEMRE) is  a systematic                                                               
procedure  in  order  to  manage  ice  that  comes  in  to  their                                                               
operating  environment.  The  key  to  the  system  is  detection                                                               
ability, which  includes using  satellite tracking  that provides                                                               
pictures  to  the  five  meter   resolution.  They  are  actively                                                               
gathering data on ice movement in  order to predict the length of                                                               
time  until   ice  comes  into  their   drilling  area.  Physical                                                               
management of  the ice will include  the use of two  ice breakers                                                               
as well as tactics such as pulling the ice away from the area.                                                                  
                                                                                                                                
She  provided a  slide  of shallow  water  wells with  relatively                                                               
shallow formations  that helped  illustrate how  much flexibility                                                               
they  have in  drilling.  They can  use  either a  jack  up or  a                                                               
floating drilling vessel. Because of  the shallow water, blow out                                                               
preventers  located  on the  subsea  can  easily be  accessed  by                                                               
divers. Furthermore,  a well was  previously drilled by  Shell on                                                               
their  prospect  site  which  gives   them  knowledge  about  the                                                               
geological and pressure characteristics there.                                                                                  
                                                                                                                                
MS.  SILVES said  ConocoPhillips' focus  is prevention,  but they                                                               
will have  a BOEM-approved spill  response contingency  plan that                                                               
includes   on-site  dedicated   spill   response  personnel   and                                                               
equipment,  which will  for an  immediate response  to a  Chukchi                                                               
incident.                                                                                                                       
                                                                                                                                
10:29:51 AM                                                                                                                   
Their spill response  strategy is to maintain  oil spill response                                                               
vessels and  a recovered oil  storage tanker  in the area  of the                                                               
drill  site. ConocoPhillips  is planning  a near  shore barge  to                                                               
store  additional response  equipment on  the water  in order  to                                                               
have  a ready  and  mobile  response fleet  able  to contain  and                                                               
recover oil  that comes towards the  shoreline. Furthermore, they                                                               
have  developed  a  shoreline  protection  plan  that  identified                                                               
priority  protection sites  along the  entire Chukchi  Coast with                                                               
protection  and recovery  strategies and  tactics for  each site.                                                               
Emergency   preparedness  is   a   part  of   their  culture   at                                                               
ConocoPhillips,  and this  contingency  plan  is being  developed                                                               
from  their experience  of  operating on  the  North Slope,  Cook                                                               
Inlet, and Prince William Sound.                                                                                                
                                                                                                                                
MS.  SILVES  said  training  their   responders  to  execute  the                                                               
contingency plan is  also one of their dedicated  efforts, and it                                                               
is definitely a focus for  their current operations. They do this                                                               
through  table-top scenarios,  equipment  deployment drills,  and                                                               
large-scale  integrated   exercises.  They  have   already  begun                                                               
conducting  training and  table-top scenarios  for their  Chukchi                                                               
operations.                                                                                                                     
                                                                                                                                
In addition to  their drills and training program,  they are also                                                               
actively  engaged  in  research  and development  for  oil  spill                                                               
response. ConocoPhillips  has been participating in  R&D projects                                                               
that look  to improve  spill detection  and oil  monitoring, that                                                               
assesses  environmental saturation  effects on  spilled oil,  and                                                               
enhance  and develop  response  technology.  Specifically in  the                                                               
Arctic, they are working on projects  similar to ACS's such as in                                                               
situ burning,  fire boom  testing in  Arctic conditions,  GIS and                                                               
trajectory mapping,  viscous oil pumping and  mechanical recovery                                                               
testing.                                                                                                                        
                                                                                                                                
MS. SILVES said  ConocoPhillips is also a member  of a multi-year                                                               
joint industry program for oil  spill response for Arctic and ice                                                               
covered  waters that  ended  last year.  The  project managed  by                                                               
SINTEF is one  of the largest independent  research institutes in                                                               
Europe;  it is  a  consortium of  Norwegian,  US governments  and                                                               
industry  partners across  the  globe working  with  some of  the                                                               
world's  experts   on  oil   spills.  They   uncovered  important                                                               
knowledge and developed  new solutions for oil  spill response in                                                               
ice-covered waters.                                                                                                             
                                                                                                                                
10:31:58 AM                                                                                                                   
The next  program of this  magnitude is being planned  through an                                                               
Arctic  Oil Spill  Response Task  Force  under the  International                                                               
Petroleum   Industry   Environmental   Conservation   Association                                                               
(IPIECA)  and  the  International  Association  of  Oil  and  Gas                                                               
Producers (OGP). Their goal is  to launch this program within the                                                               
first quarter of 2011.                                                                                                          
                                                                                                                                
REPRESENTATIVE  GATTO  asked  if  the  five-meter  resolution  is                                                               
through a satellite.                                                                                                            
                                                                                                                                
MS. SILVES  answered yes; and  it is  able to see  through clouds                                                               
and weather - within five meters of their prospect area.                                                                        
                                                                                                                                
CO-CHAIR  WIELECHOWSKI   asked  her   talk  about  some   of  the                                                               
particular challenges  they have  in icy  waters in  the Beaufort                                                               
and  Chukchi Seas  that  they  might not  have  in  the Gulf  [of                                                               
Mexico].                                                                                                                        
                                                                                                                                
MS. SILVES  replied that there is  no ice in the  Gulf of Mexico,                                                               
and ConocoPhillips  is planning  to drill in  open water.  So the                                                               
environment and its challenges will  be very similar during their                                                               
exploration season.                                                                                                             
                                                                                                                                
10:33:51 AM                                                                                                                   
CO-CHAIR WIELECHOWSKI asked  if there was a spill  in the Chukchi                                                               
and Beaufort Sea in the winter  with ice, what kind of challenges                                                               
would that present to a cleanup.                                                                                                
                                                                                                                                
MS.  SILVES  answered  that  access  to  the  spill  would  be  a                                                               
challenge,  but she  emphasized  that they  are  not planning  to                                                               
drill in the Chukchi Sea during ice conditions.                                                                                 
                                                                                                                                
CO-CHAIR  WIELECHOWSKI  said he  understood  that,  but once  the                                                               
wells  is  up,   if  there  were  an  incident   in  ice  covered                                                               
conditions, does  something additional need  to be done.  What do                                                               
other countries do?                                                                                                             
                                                                                                                                
MS. SILVES  replied that they are  over 10 years away  from that,                                                               
and multiple  public review sessions  and where  technology could                                                               
change  over  time.  Their  focus  right now  is  looking  at  an                                                               
exploration well.                                                                                                               
                                                                                                                                
10:35:20 AM                                                                                                                   
CO-CHAIR MCGUIRE said they are  looking forward to connecting one                                                               
or both  of these projects up  with the TAPS; and  right now they                                                               
are  assessing  open-water   season  exploration  activities  and                                                               
making sure  we have  the best  response capabilities  there. The                                                               
next  part (having  been  bifurcated)  is what  will  have to  be                                                               
considered  with  full production.  She  asked  if there  is  any                                                               
chance that an  ice flow will come in even  in mid-July, and what                                                               
ConocoPhillips has done to consider that shoulder season.                                                                       
                                                                                                                                
MS. SILVES  answered that is  part of  what they are  using their                                                               
satellite detection for now.                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG asked who  they are partnering with now                                                               
for tracking ice.                                                                                                               
                                                                                                                                
MS. SILVES replied that she wasn't  as familiar with that area of                                                               
their work, but she would get back to him.                                                                                      
                                                                                                                                
10:37:55 AM                                                                                                                   
REPRESENTATIVE  GUTTENBERG   said  there  is  a   total  lack  of                                                               
infrastructure on  the North  Slope, and  asked where  they would                                                               
put workers  if they  needed to  be up  there for  a spill  or an                                                               
accident.                                                                                                                       
                                                                                                                                
MS.  SILVES answered  that their  logistical planning  is ongoing                                                               
for the  Chukchi operations and they  are still a few  years away                                                               
from exploring  there. Some  initial thoughts  go back  to "float                                                               
hotels" that were used during  the Exxon Valdez spill that housed                                                               
responders on the water.                                                                                                        
                                                                                                                                
CO-CHAIR MCGUIRE  said they would  have two more  hearings during                                                               
the Interim that  will focus on things like  different aspects of                                                               
infrastructure. On October 1 the  Northern Waters Task Force will                                                               
meet and  the premise is  to discuss  whether or not  the Coastal                                                               
Zone Management  Program should  be changed;  another part  of it                                                               
will be about infrastructure. They  also formed the Arctic caucus                                                               
through  PNWR that  is meeting  in December  in Barrow  to assess                                                               
infrastructure in the Arctic in general.                                                                                        
                                                                                                                                
10:40:05 AM                                                                                                                   
REPRESENTATIVE GATTO  recalled that she said  ConocoPhillips' BOP                                                               
was accessible by divers at about  150 feet, but that is probably                                                               
at the outer limit of a  diver's ability to function. He asked if                                                               
they  had access  to remote  vehicles like  the ones  (ROBs) that                                                               
were used  in the  Gulf of Mexico  or can't they  be used  in the                                                               
Arctic.                                                                                                                         
                                                                                                                                
MS. SILVES answered that all  possibilities for their exploration                                                               
activities would be looked at.                                                                                                  
                                                                                                                                
10:41:05 AM                                                                                                                   
PETE SLAIBY,  Vice President and  General Manager,  Shell Alaska,                                                               
said  he wasn't  an  expert in  oil spill  response,  but he  has                                                               
experts behind  him that  he could  call. He  said they  have 137                                                               
Beaufort leases - $84 Million,  275 Chukchi leases - $2.1 Billion                                                               
for a total investment in Alaska  to date of $3.5 Billion. It has                                                               
provided hundreds  of millions to Alaskan  companies and offshore                                                               
service providers.                                                                                                              
                                                                                                                                
He said Shell  likes the offshore and has been  involved there in                                                               
over 50 years  of being in Alaska. They have  drilled four of the                                                               
five wells  in the  Chukchi Sea in  the 1990s; and  12 of  the 90                                                               
wells  drilled in  the Alaskan  portion of  the Beaufort  Sea and                                                               
partnered  in another  7. They  drilled 33  exploration wells  in                                                               
Alaska (not  counting what they did  in Cook Inlet in  the 1960s)                                                               
of 32 of them were offshore.                                                                                                    
                                                                                                                                
10:43:54 AM                                                                                                                   
He said they  had a fairly successful 3-D  seismic acquisition in                                                               
the last  three years with  USGS estimates of 25  Billion barrels                                                               
of oil and 120 TCF of gas in  the Alaska Arctic. So when you look                                                               
at  OCS,  it   is  material.  The  only  other   area  with  more                                                               
hydrocarbons  would be  the Deepwater  Gulf of  Mexico (GOM  OCS)                                                               
with around  44 billion barrels  of oil. Alaska  offshore exceeds                                                               
all the East/West Coast OCS  resources combined. It could provide                                                               
35,000 jobs per year for Alaska  over a 50-year period; and about                                                               
$72 billion in  payroll. It will extend the life  to the TAPS and                                                               
has a real  capability to open up the NPRA  (with a pipeline from                                                               
the Chukchi Sea).                                                                                                               
                                                                                                                                
MR. SLAIBY said they don't want to  ever have a blow out, so they                                                               
put a  huge effort  into prevention. He  described their  view of                                                               
the world as  a bowtie; everything on one side  is prevention and                                                               
where you spend a  huge amount of time; the event  is the knot in                                                               
the  tie;  and  then the  other  end  of  the  tie would  be  the                                                               
response.  Truly successful  companies are  always ready  for the                                                               
response  and  Shell  is  one  of these.  They  spend  a  lot  on                                                               
prevention which doesn't get a lot of air play.                                                                                 
                                                                                                                                
10:47:24 AM                                                                                                                   
MR. SLAIBY said they have four phases:                                                                                          
                                                                                                                                
Phase I - Proper Planning,  Drill Well on Paper (DWOP) workshops,                                                               
risk identification, training, routine  drills on rig (bop tests,                                                               
pit drills, trip drills)                                                                                                        
Phase II  - Early  kick detection  and kick  response procedures.                                                               
continuous  monitoring, response,  including  use  of rtoc  (shut                                                               
down pumps - flow check - shut in - kill well)                                                                                  
Phase  III -  Mechanical barriers  basically blow  out preventers                                                               
(including  at least  two special  arctic barriers),  testing and                                                               
inspection criteria in place to ensure competency                                                                               
Phase IV - Loss of  Control - relief well operations, contingency                                                               
plans in place for the worst case scenario                                                                                      
                                                                                                                                
One  of the  things  they  have committed  to  doing  by 2011  is                                                               
putting a containment  system in place that could  be deployed in                                                               
the Arctic to  capture hydrocarbons before they  are released. He                                                               
said that  Shell already has  a system  in place that  would keep                                                               
the hydrocarbons at their source.                                                                                               
                                                                                                                                
10:48:57 AM                                                                                                                   
MR. SLAIBY said  some of their own assets would  be in place, but                                                               
some equipment would be shared.  They have committed to have this                                                               
ready to go for the 2011  season. It has all been available since                                                               
2007.                                                                                                                           
                                                                                                                                
He said Shell has a separate  c-plan for the Beaufort and Chukchi                                                               
Seas; the assets are either under  contract or owned by Shell. It                                                               
is  based   on  a  three   tier  system  very  similar   to  what                                                               
ConocoPhillips  just  talked  about.  They view  success  as  not                                                               
having a blow out,  but the issue will be to  keep the oil around                                                               
the source if there is one. That has always been their plan.                                                                    
                                                                                                                                
The vessels they have are the  ice class Nanuq, which is designed                                                               
to operate and  be deployed within one hour from  the start of an                                                               
incident.  It is  presently in  Dutch Harbor.  On the  near shore                                                               
they have an ice  class barge that is in the  Port of Seward. The                                                               
equipment  has  met ADEC  standards,  but  most  of it  has  been                                                               
designed  to  twice  the  specifications.   The  wells  they  are                                                               
proposing to  build in  2011 would be  under the  ADEC standards,                                                               
but  possibly  the Beaufort  Sea  wells  would not  exceed  those                                                               
standards.                                                                                                                      
                                                                                                                                
10:51:31 AM                                                                                                                   
Questions have been raised about  what escalation looks like, and                                                               
their response  is to be  there in  an hour. They  recognize that                                                               
they can  keep things at  bay for a  certain amount of  time, but                                                               
things have to  start very quickly thereafter. He  showed a world                                                               
chart  of other  resources  (including  personnel, lodging)  that                                                               
could be  sent up as well.  Shell already has quarters  up there,                                                               
but they would build more.                                                                                                      
                                                                                                                                
He said Shell's c-plan has  been through numerous reviews and has                                                               
withstood  a barrage  of litigation  from a  number of  different                                                               
sources.  It has  been reviewed  and approved  by the  BOEM, MMS,                                                               
EPA, US Coast  Guard, FWS, NMFS, the North Slope  Borough and has                                                               
been upheld in court. They  participate in a number the different                                                               
studies that people have talked about as well.                                                                                  
                                                                                                                                
In  summary,  he  said,  Shell's  view  is  that  they  would  be                                                               
responsible  for  any  operations  in the  Arctic.  There  is  no                                                               
question  about that,  and they  would hold  the job  of primacy.                                                               
Their assets would be ready for any event, Shell or otherwise.                                                                  
                                                                                                                                
He said  Shell supports the  Coast Guard moving into  the Arctic,                                                               
but their  role is to run  the unified command center  (the Coast                                                               
Guard didn't  collect a drop of  oil in the Gulf  of Mexico). The                                                               
operators are expected to provide  the physical assets, and Shell                                                               
stands ready  to provide  those. He  said they  have contemplated                                                               
that Shell  will be  able to deliver  a same-season  relief well,                                                               
but their primary  response would be by the rig  that drilled the                                                               
well, the  Noble Discoverer. To  that end, they have  purchased a                                                               
second  set of  blow out  preventers that  would be  kept on  it.                                                               
Obviously, if you're  in a blow out situation, your  first set of                                                               
blow  out preventers  stay with  the well.  The second  set would                                                               
also  require  the  associated casing  piping  and  mud  systems.                                                               
Besides that they  are bolstering their BOPs by  putting a second                                                               
set of  sheer ends  in one  of the  cavities (it's  a four-cavity                                                               
BOP).  The  BOPs  would  have  remote  access  panels.  They  had                                                               
initially  planned  for  four  divers  and  for  remote  operated                                                               
vehicles,  but  they are  doubling  those  numbers to  have  good                                                               
escalation capability.                                                                                                          
                                                                                                                                
10:56:20 AM                                                                                                                   
Shell Alaska  agreed to go to  seven day testing for  their BOPs.                                                               
Federal  requirements  in  the  Gulf are  14  days.  Even  though                                                               
Alaska's standards are more rigorous, Shell will adhere to them.                                                                
                                                                                                                                
MR. SLAIBY  said they  also have a  second drilling  unit, called                                                               
Kulluk that was  recently pulled out of the  Mackenzie Delta; and                                                               
it  is presently  in Dutch  Harbor. They  have always  planned on                                                               
warming the  rig up regardless of  where they are, but  they have                                                               
agreed to  going to  the point  of activating  it. This  means it                                                               
will  have a  marine crew  and partial  deck crew  as wells  as a                                                               
partial rig crew  on board.  Their drilling  contractor has crews                                                               
they keep  on standby in North  America primarily to work  in the                                                               
maritime  provinces  of  Canada,  but   they  could  be  used  if                                                               
mobilization were required. This asset  could be ready to respond                                                               
in a  number of days.  This is what they  will do until  they are                                                               
drilling with  two drilling rigs  in the Arctic Ocean.  When they                                                               
have  two floating  drilling units  in the  Beaufort and  Chukchi                                                               
Seas there will  be no need to have a  dedicated relief well rig.                                                               
The rig  that is drilling the  second well would simply  stop the                                                               
work, temporarily abandon it, and move over.                                                                                    
                                                                                                                                
10:58:22 AM                                                                                                                   
He said  when one looks at  complexity, no well is  without risk.                                                               
But these  wells are  not Gulf  of Mexico  wells that  are highly                                                               
pressured at a  profound water depth. They believe  Shell has the                                                               
highest response  planning standard  and stricter  oversight ever                                                               
seen  anywhere  in  the  US   and  the  world.  He  said  ongoing                                                               
investigations may yield further recommendations.                                                                               
                                                                                                                                
10:59:16 AM                                                                                                                   
CO-CHAIR  MCGUIRE asked  to what  extent  Shell subcontracts  the                                                               
operational roles. And  is there an agreement in  place to adhere                                                               
to the standard?                                                                                                                
                                                                                                                                
MR. SLAIBY responded that Shell  has a number of contractors, but                                                               
there is  no ambiguity about  who ultimately  has accountability;                                                               
in  Alaska; it's  Shell. The  contractors will  be supervised  by                                                               
Shell  people, but  they will  have  their own  house safety  and                                                               
environmental (HSE)  management systems  that work  under Shell's                                                               
HSE management system.  They are linked by  a "bridging document"                                                               
that  delineates how  their  responsibilities  flow into  Shell's                                                               
accountabilities  to  deliver  a   well.  This  process  requires                                                               
management, audit, and review.                                                                                                  
                                                                                                                                
11:01:26 AM                                                                                                                   
CO-CHAIR MCGUIRE said some people  have speculated that a methane                                                               
gas  bubble might  have  contributed to  the  Gulf disaster,  and                                                               
asked  if Shell's  c-plan had  considered how  they would  factor                                                               
into the blow out preventer standard.                                                                                           
                                                                                                                                
MR. SLAIBY  answered they are  currently clearing drill  sites on                                                               
Harrison  Bank,  Shell's  area  in the  Beaufort  Sea.  They  are                                                               
required to do a shallow  hazard survey that actually seismically                                                               
determines if  there is shallow  gas or hydrates sitting  below a                                                               
potential drill  site. He can't submit  a plan to the  BOEM until                                                               
that work is thoroughly done and analyzed.                                                                                      
                                                                                                                                
REPRESENTATIVE JOHNSON  asked what  they know about  the pressure                                                               
and viscosity characteristics of the resource.                                                                                  
                                                                                                                                
MR.  SLAIBY answered  that they  have  a number  of well  control                                                               
points for  their five wells in  the Chukchi and 30  wells in the                                                               
Beaufort. The  wells here tend to  be less pressured than  in the                                                               
Gulf of Mexico,  and it's for a number of  different reasons. One                                                               
is that the sedimentation process  here happened a lot slower. In                                                               
the  Gulf of  Mexico the  Mississippi River  is a  source of  the                                                               
sediment and when the biological  material settled out, there was                                                               
a massive  amount of "dump"  on top of  it putting more  and more                                                               
pressure on volatile  materials without a chance to  escape. As a                                                               
result,  over  time  pressure  built  up.  So,  their  worse-case                                                               
discharge numbers in  Alaska are smaller than in  deep water Gulf                                                               
of Mexico  operations. The bulk  of Shell's production  is coming                                                               
from 25 wells with smaller capacity.                                                                                            
                                                                                                                                
REPRESENTATIVE JOHNSON  said both  ConocoPhillips and  Shell have                                                               
indicated a fairly extensive response  plan and asked if they are                                                               
working together.                                                                                                               
                                                                                                                                
11:05:50 AM                                                                                                                   
MR. SLAIBY answered  that more and more  cooperation is evolving.                                                               
The  Coast Guard  would  direct any  incident;  Shell would  work                                                               
through  them. ConocoPhillips  would eventually  submit a  c-plan                                                               
for the work they are going  to do. The protocols would be inside                                                               
the   c-plan,  which   specify   telephone   numbers  and   radio                                                               
frequencies et cetera.                                                                                                          
                                                                                                                                
CO-CHAIR  WIELECHOWSKI said  oil spill  cleanup is  significantly                                                               
more  difficult in  colder temperatures  and ice-covered  waters,                                                               
and asked  him how  he deals  with a  blow out  in the  middle of                                                               
January in completely ice-covered water.                                                                                        
                                                                                                                                
MR. SLAIBY answered  there is never a good time  for that kind of                                                               
work,  but they  will have  to  work in  ice  - in  areas of  the                                                               
Beaufort and  the Chukchi.  Their open  water season  is mid-July                                                               
through October 31, so they don't  really plan on being out there                                                               
in January.                                                                                                                     
                                                                                                                                
The way  they handle  broken ice is  with ice  management vessels                                                               
that  carefully break  ice -  very gingerly,  he explained.  They                                                               
don't  want to  add noise  into the  water. They  have incidental                                                               
harassment  authorizations  that  they take  very  seriously  and                                                               
don't want to  obstruct or change routines of  marine mammals and                                                               
other creatures  out there.  In an oil  spill situation  all that                                                               
changes.  Their  c-plan  provides  ways that  they  can  actually                                                               
harass animals  to keep them out  of the area. In  that instance,                                                               
they would be setting up areas  where they could burn or disburse                                                               
or mechanically collect oil.                                                                                                    
                                                                                                                                
Dwindling  hours of  light becomes  a factor  as well,  and their                                                               
vessels  do have  infrared capabilities  on  vessels and  spotter                                                               
aircraft. They  keep the  ice away and  use burning,  which works                                                               
better  in the  Arctic,  because the  water  is shallower,  which                                                               
means they  can physically anchor  their burn booms to  bottom of                                                               
the seafloor.  The cold temperature  means that the oil  tends to                                                               
disperse  less and  combust more  completely.  Arctic and  SINTEF                                                               
work  actually works  pretty well;  even  in the  Gulf of  Mexico                                                               
burning worked  well. Work  is being done  in Barrow  testing the                                                               
toxicity of dispersants on Arctic  biota and marine animals. Work                                                               
is also  being done with  microbes that  will eat and  absorb the                                                               
oil after the dispersant. Keeping  the oil localized and building                                                               
a containment dome will also benefit Alaska.                                                                                    
                                                                                                                                
11:12:13 AM                                                                                                                   
REPRESENTATIVE GATTO asked if they  need a relief well drilled in                                                               
the Beaufort,  how they would move  a structure if the  ice is 15                                                               
ft. thick.                                                                                                                      
                                                                                                                                
MR.  SLAIBY answered  they  would move  the  vessel through  open                                                               
water, and  if it was icy  they would manage the  ice. Three feet                                                               
of  ice is  manageable with  their ice  breakers. Obviously  they                                                               
wouldn't break  through 15 ft. of  ice, but he didn't  think they                                                               
would  be  out  there  drilling  in 15  ft.  of  ice  during  the                                                               
exploration  phase. Under  normal circumstances  in the  Beaufort                                                               
they are not going to tell  their ice management vessels to break                                                               
ice because  of the noise it  would create in the  water. If they                                                               
had  a  blow out  in  those  conditions, they  would  temporarily                                                               
abandon the well and bring the  rig, which has an ice breaker and                                                               
handler dedicated to it, into  play. They wouldn't work through a                                                               
15 ft. ice pack; they would work south of it.                                                                                   
                                                                                                                                
REPRESENTATIVE GUTTENBERG  asked if  the plan  would be  the same                                                               
for a production well.                                                                                                          
                                                                                                                                
MR. SLAIBY answered that would  be different. The structures they                                                               
will put out there would  be drilling year-round 24/7. They would                                                               
be  large concrete  gravity-based  structures that  would have  a                                                               
large  amount of  containment within  the structure  itself (like                                                               
structures they  use in the  northern North Sea  where conditions                                                               
are much worse than in the  Chukchi and Beaufort in terms of wind                                                               
and waves). It's just colder in the Beaufort and Chukchi Seas.                                                                  
                                                                                                                                
He also  pointed out that  while he looks forward  to development                                                               
there, it  is a decade away;  and the science they  are gathering                                                               
now is  what they will  need to  support a large  development. In                                                               
the  last  three years  they  have  spent $50  million  gathering                                                               
science to support  the EISs. He estimated  that between industry                                                               
and the taxpayers  they had spent a half  billion dollars putting                                                               
together   the  environmental   baseline  studies   that  support                                                               
exploration drilling.                                                                                                           
                                                                                                                                
11:16:18 AM                                                                                                                   
CO-CHAIR  MCGUIRE  recalled  that  the second  largest  spill  in                                                               
Alaska  was  the  Selendang  Ayu, a  freighter,  and  asked  with                                                               
possible trade  routes opening up  in the Arctic, if  Shell would                                                               
make its assets available to  non-oil industry traffic that comes                                                               
through the Arctic that might have an incident.                                                                                 
                                                                                                                                
MR. SLAIBY answered yes; and  it's not just Shell; it's everybody                                                               
who has these  assets. Three of every four barrels  of oil he has                                                               
picked up have been other peoples' oil.                                                                                         
                                                                                                                                
CO-CHAIR MCGUIRE announced a break from 11:18 to 11:31.                                                                         
                                                                                                                                
11:31:48 AM                                                                                                                   
CO-CHAIR  WIELECHOWSKI  called  the  meeting back  to  order  and                                                               
announced that the environmental panel would testify next.                                                                      
                                                                                                                                
DR. JEFFERY  SHORT, Pacific Science  Director, Oceana  Alaska, an                                                               
international  marine  conservation   organization  dedicated  to                                                               
using  science, law,  policy,  and public  input  to protect  the                                                               
world's oceans. Prior to that  he worked for the National Oceanic                                                               
and Atmospheric  Administration (NOAA)  and in  that role,  I led                                                               
numerous  studies  on the  Exxon  Valdez  oil spill.  His  entire                                                               
career  has  been   devoted  to  studying  the   effects  of  oil                                                               
pollution.                                                                                                                      
                                                                                                                                
He applauded  the presentations  they had just  seen and  all the                                                               
oil industry had done to prevent  oil spills in Alaska, giving us                                                               
the enormous benefits of those  revenues at minimal environmental                                                               
cost, recognizing that they expend  a lot of ingenuity and effort                                                               
to  do that.  He  recognized  that we're  on  the  cusp of  major                                                               
decisions regarding the environmental  fate of the northern coast                                                               
of our state.                                                                                                                   
                                                                                                                                
11:33:49 AM                                                                                                                   
While recognizing  all that  industry has  done, Dr.  Short said,                                                               
there is one fact everyone has  to soberly recognize - that every                                                               
major marine  dependent oil region  in the United States  has had                                                               
at least  one major unanticipated  oil spill. These  projects run                                                               
for decades  once development begins  and it's prudent  to expect                                                               
if we launch into major development  on the north coast of Alaska                                                               
offshore  that we  will very  likely  have another  unanticipated                                                               
major spill.  No one  anticipates these  things because  they are                                                               
almost always unique because and as  a result of human error that                                                               
combines  with  an  unfortunate set  of  circumstances  that  are                                                               
impossible to  predict. Don't think  in terms  of if, but  when a                                                               
major spill occurs.                                                                                                             
                                                                                                                                
DR.  SHORT  said  from  his  perspective  the  Deepwater  Horizon                                                               
happened because of an unfortunate  combination of lax regulatory                                                               
oversight and response performance plans  that are based on ideal                                                               
test  conditions but  that have  to be  applied under  conditions                                                               
that were almost always less than  ideal. In the Arctic they will                                                               
often be far  from less than ideal. And little  noticed, but very                                                               
important, are  the challenges posed  by just the  differences in                                                               
scale.                                                                                                                          
                                                                                                                                
He said  when they  do tests of  oil spill  response preparedness                                                               
they are usually under ideal  conditions but they are also small-                                                               
maybe consisting of  a few barrels. For example,  when oil leaked                                                               
out of the Exxon  Valdez, it created slick at the  rate of half a                                                               
football field per second for two  and a half days. The Deepwater                                                               
Horizon was  twice that for  almost three months.  The logistical                                                               
challenges  of coping  with that  rate of  slick creation  become                                                               
overwhelming.                                                                                                                   
                                                                                                                                
11:36:38 AM                                                                                                                   
Currently evidence is  scant that we have  adequate technology in                                                               
place  to cope  with  a  marine spill  on  the  North Slope.  One                                                               
exercise conducted  in 2000 resulted in  video documentation that                                                               
was far from reassuring. Oceana  made a state records request for                                                               
all subsequent  field tests and  got basically nothing.  So, they                                                               
are not at  all persuaded that the response assets  are there for                                                               
the north coast.                                                                                                                
                                                                                                                                
DR. SHORT  pointed out they  have very  little idea of  what they                                                               
are risking  on the North Slope.  A lot more science  needs to be                                                               
done  to come  up with  a credible  biological impact  management                                                               
plan. How much science is enough?  They need to know what all the                                                               
major species are  that inhabit the region,  which currently they                                                               
don't; they need enough science  to construct a quantitative food                                                               
web model  with conservative basis a  credible environmental risk                                                               
assessment. By that he means a  spill has killed this many marine                                                               
mammals.  How long  will it  take for  the food  web to  recover?                                                               
Third,  they need  enough science  so  that they  know where  the                                                               
important  ecological areas  and sensitive  habitats are  so that                                                               
they can be prioritized.                                                                                                        
                                                                                                                                
11:38:41 AM                                                                                                                   
The  coastal native  cultures are  also at  risk, he  said. These                                                               
people have lived there for 8,000  years and have a very intimate                                                               
relationship with  the marine environment that  become threatened                                                               
existentially by  an offshore oil  spill - because, as  they have                                                               
seen  on  the Deepwater  Horizon  and  every other  major  marine                                                               
spill,  whenever  on happens  people  become  terrified that  the                                                               
seafood is  no longer safe.  In the case of  coastal maintenance,                                                               
this severs the  generational link between the young  and the old                                                               
because  they no  longer  trust the  food supply  to  go out  and                                                               
continue their  subsistence way of  life. And  you end up  with a                                                               
problem that  money can't fix and  that can't be remedied  by any                                                               
means.                                                                                                                          
                                                                                                                                
11:39:17 AM                                                                                                                   
He  implored  them if  they  are  going forward  with  developing                                                               
offshore  resources on  the north  coast  that they  at least  do                                                               
three things:  increase fund for  science with a nickel  a barrel                                                               
tax and  remove the  $50 million  cap. Second,  require realistic                                                               
response  and  rescue  capabilities and  demonstrated  technology                                                               
under realistic  field conditions. Finally, allow  for meaningful                                                               
community involvement so that the  decisions don't have potential                                                               
devastating impacts on the local residents.                                                                                     
                                                                                                                                
11:40:55 AM                                                                                                                   
REPRESENTATIVE  GATTO  said   everyone  is  an  environmentalist.                                                               
Everything  they  do  adds  something  to  the  environment  that                                                               
someone is going to object to.                                                                                                  
                                                                                                                                
11:42:05 AM                                                                                                                   
DR.  SHORT  said   that  is  why  he  began   his  comments  with                                                               
recognizing the efforts and cooperation industry is displaying.                                                                 
                                                                                                                                
11:42:54 AM                                                                                                                   
REPRESENTATIVE  JOHNSON asked  him  to explain  his second  point                                                               
more fully.                                                                                                                     
                                                                                                                                
DR.  SHORT responded  by referencing  the video  documentation of                                                               
the field  exercise in 2001  to see  how oil spill  cleanup would                                                               
work in  the Beaufort  Sea; it  was not  impressive and  far from                                                               
reassuring.   These  exercises   occur  under   close  to   ideal                                                               
conditions,  which are  rarely going  to  be the  case in  actual                                                               
operations  off the  north  coast  of Alaska  where  it could  be                                                               
foggy;  it could  have major  storms, high  winds, and  darkness.                                                               
Oceana Alaska would like to  see some credible demonstration that                                                               
response approaches would work under those conditions.                                                                          
                                                                                                                                
REPRESENTATIVE JOHNSON  asked if his  group had done  anything to                                                               
develop a reasonable response other than listing criteria.                                                                      
                                                                                                                                
11:44:36 AM                                                                                                                   
DR.  SHORT replied  that  they have  recommended  that much  more                                                               
resources go  into research;  he didn't have  the capacity  to do                                                               
oil spill response research.                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON  said  there  will  be  drilling  in  the                                                               
Arctic,  and it  might not  be  the United  States. Someone  else                                                               
might not have the same high  standards that we do. Is he working                                                               
with Canada, Norway, the former Soviet Union?                                                                                   
                                                                                                                                
DR. SHORT answered  that they are working with  those countries -                                                               
China, Russia,  Norway, and Canada.  The US could benefit  from a                                                               
closer  relationship  with  Norwegian and  Canadian  communities.                                                               
Much of the Gulf capability came from Canada.                                                                                   
                                                                                                                                
11:47:38 AM                                                                                                                   
CO-CHAIR  MCGUIRE  asked  if  Oceana had  looked  at  what  other                                                               
agencies  might fill  the financial  gap that  is a  result of  a                                                               
decline in production.                                                                                                          
                                                                                                                                
DR. SHORT answered that removing the cap would be one way.                                                                      
                                                                                                                                
CO-CHAIR MCGUIRE  asked if they  had taken a position  on whether                                                               
the  state  should  invest in  research  through  its  university                                                               
system. Part of that discussion  comes from the need to establish                                                               
first hand and local data that is unbiased.                                                                                     
                                                                                                                                
DR. SHORT  answered Oceana encourages  and endorses the  State of                                                               
Alaska  to broaden  its  research  capability and  infrastructure                                                               
through the university, especially in collaboration with Norway.                                                                
                                                                                                                                
REPRESENTATIVE GUTTENBERG asked what Oceana is and what it does.                                                                
                                                                                                                                
DR.  SHORT  answered  that  they   are  an  international  marine                                                               
conservation organization that tries  to combine science, law and                                                               
policies to  effect change  in management  of ocean  resources to                                                               
the benefit of those ecosystems. They  want to make more fish for                                                               
everybody.                                                                                                                      
                                                                                                                                
REPRESENTATIVE GUTTENBERG  asked that they don't  conduct drills;                                                               
they just advise.                                                                                                               
                                                                                                                                
DR. SHORT said that was correct.                                                                                                
                                                                                                                                
CO-CHAIR WIELECHOWSKI thanked him and introduced Ms. Epstein.                                                                   
                                                                                                                                
11:50:16 AM                                                                                                                   
LOIS  EPSTEIN,  P.E.,  Arctic Program  Director,  The  Wilderness                                                               
Society, a  national conservation organization with  an office in                                                               
Anchorage,  said  she has  spent  over  25  years, 9  in  Alaska,                                                               
working  on  oil  and  gas  technical  and  policy  issues  as  a                                                               
consultant and as  an employee of non-profit  organizations.  She                                                               
has served for many years  on federal advisory committees for the                                                               
U.S. Department of Transportation on  oil pipeline safety and for                                                               
the  US Environmental  Protection Agency  on petroleum  refining,                                                               
and was  one of 15  outside technical  advisors on the  report to                                                               
the President in May 2010  containing recommendations to increase                                                               
offshore  drilling  safety. She  was  in  Houston two  weeks  ago                                                               
speaking on a Bureau of Ocean Energy Management panel on safety.                                                                
                                                                                                                                
As someone  who has commented  on and utilized  Alaska Department                                                               
of   Environmental   Conservation  (DEC)   regulations   covering                                                               
pipelines  and  c-plans  since  2001   ,  Ms.  Epstein  said  she                                                               
recognized that  there are a  number of good components  to those                                                               
regulations, and  to Alaska Oil  and Gas  Conservation Commission                                                               
(AOGCC) regulations on wells.   The key problem lies, however, in                                                               
regulatory  implementation. Everyone  knows  that  even the  best                                                               
regulations   are  not   valuable   unless   they  are   enforced                                                               
effectively. This is the number  one problem with the state's oil                                                               
spill prevention and response program.                                                                                          
                                                                                                                                
This  past summer  it became  clear  to most  Americans that  the                                                               
Minerals  Management  Service  - the  federal  offshore  drilling                                                               
regulatory agency was dysfunctional.  One of its biggest problems                                                               
was  the  conflict  of  interest the  agency  had  in  regulating                                                               
offshore   drilling  while   simultaneously  collecting   federal                                                               
leasing  and royalty  income.  Without  effective enforcement  of                                                               
even  the  best regulations,  what  you  have is  self-regulation                                                               
which could  lead to worst-case  scenarios as it did  this summer                                                               
in the  case of BP's  Deepwater Horizon tragedy.   Unfortunately,                                                               
the State  of Alaska has  this same conflict of  interest problem                                                               
in  that  the  state  seeks to  increase  revenue  by  maximizing                                                               
leasing  and  production.  This   means,  in  certain  instances,                                                               
enforcement might  not be pursued  because that would  change the                                                               
revenue picture.                                                                                                                
                                                                                                                                
To  many  state  leaders,  a  strong  and  effective  enforcement                                                               
program means that some oil  companies may choose to locate where                                                               
regulations and/or enforcement  are looser.  Another  way to look                                                               
at this situation, however, is  that industry leaders do not need                                                               
to worry  about enforcement while industry  laggards would choose                                                               
not to  operate in Alaska.   According to  a statement made  by a                                                               
DEC representative just two weeks  ago in Anchorage before former                                                               
Lt. Governor Fran Ulmer and  Co-Chair Bill Reilly of the National                                                               
Oil Spill  Commission, the State  of Alaska has  "zero tolerance"                                                               
for oil spills.  In reality,  though, spills like those from BP's                                                               
North Slope pipelines  in 2006 which resulted in  revenue loss to                                                               
the  state could  have  been prevented  with  an effective  state                                                               
enforcement program; in fact,  those leaking low-stress pipelines                                                               
were regulated  by the state  and not regulated  federally, which                                                               
is  true for  many  gathering lines,  flow-lines, produced  water                                                               
lines,  and well  piping.   In  the case  of the  BP North  Slope                                                               
spills  in 2006,  which resulted  in  revenue loss  to the  state                                                               
could  have been  prevented with  an effective  state enforcement                                                               
program.  The state  was  the only  entity  that regulated  those                                                               
pipelines not  the federal government,  and there was  not enough                                                               
preventive enforcement activity prior  to those spills occurring.                                                               
So, clearly our zero tolerance did not work in that case.                                                                       
                                                                                                                                
In 2004,  she completed a  report for Cook Inlet  Keeper entitled                                                               
"Cops  Off the  Beat"  that identified  three  types of  releases                                                               
regulators  should focus  enforcement  resources  on: high  spill                                                               
volumes,  repeated spills  (which  are and  indicator of  ongoing                                                               
problems),  and  spills  to   environmentally  (and  historic  or                                                               
culturally) sensitive areas.  The  report also makes the case for                                                               
increased  criminal  enforcement  for  egregious  conduct.  Fair,                                                               
clear,  visible, and  consistent enforcement,  including criminal                                                               
enforcement  in  egregious  instances,  is critical  to  a  well-                                                               
functioning regulatory system.                                                                                                  
                                                                                                                                
To ensure  improved enforcement  and prevent  oil spills,  and to                                                               
some extent address the conflict  of interest that is inherent at                                                               
the state  level, she suggested  that they require DEC  and AOGCC                                                               
to provide  the legislature and  the public  by the start  of the                                                               
upcoming legislative  session with  reports of  their enforcement                                                               
actions  for each  of the  past five  years on  oil-spill related                                                               
issues, along with annual updates.  These reports should contain,                                                               
at  a   minimum,  information  on   the  numbers  and   types  of                                                               
inspections, civil and criminal  penalties assessed, a listing of                                                               
which  operators had  enforcement actions  brought against  them,                                                               
and descriptions  of any releases  or other  violations resulting                                                               
in enforcement actions.  This way they could look  at trends, see                                                               
whether  enforcement   is  primarily  focused  on   operators  or                                                               
individuals.                                                                                                                    
                                                                                                                                
A second  key way  to help  ensure a  well-functioning regulatory                                                               
system  that  prevents oil  spills  is  to support  creation  and                                                               
mandatory   industry  funding   of   regional  citizen   advisory                                                               
committees  or RCACs,  especially for  the Trans-Alaska  Pipeline                                                               
System (TAPS).   These committees, like the  Prince William Sound                                                               
RCAC, are the  eyes and ears of the public  on the ground working                                                               
on  spill prevention.    RCAC funding  would  support staff  that                                                               
would  conduct or  supervise public  interest research  on issues                                                               
like pipeline  safety. Additionally,  creation of  RCACs promotes                                                               
ongoing  dialogue among  the  public,  industry, and  regulators.                                                               
Such  entities would  ensure ongoing  vigilance  and prevent  the                                                               
complacency that leads to problems.                                                                                             
                                                                                                                                
11:55:36 AM                                                                                                                   
MS. EPSTEIN said she continues  to support the following measures                                                               
to prevent  and mitigate oil spills  which I submitted to  DEC in                                                               
2009 as  a package of  alternatives to its problematic  oil spill                                                               
risk assessment process:                                                                                                        
1. Create  an oil and gas  Ombudsman position on the  North Slope                                                               
and   in  Cook   Inlet  to   receive  and   act  on   public  and                                                               
whistleblower-identified problems.   The Ombudsman position would                                                               
have funds for field investigations and analysis;                                                                               
2. Strengthen regulations where needed  so Alaska would, in fact,                                                               
have  the best  possible oil  and  gas regulatory  system in  the                                                               
world.   This can be  done by conducting a  comparative analysis.                                                               
Note that  the state's limited corrosion  prevention requirements                                                               
for state-only  regulated oil pipelines  is a  particular problem                                                               
at this time which needs to be remedied;                                                                                        
3.  Contract with  accident  investigators so  severe/significant                                                               
accidents are investigated for  root causes, with recommendations                                                               
made to  prevent future similar  events.  This is  needed because                                                               
the National Transportation Safety  Board and the Chemical Safety                                                               
and Hazard  Investigation Board rarely,  if ever, come  to Alaska                                                               
to investigate  oil and  gas industry  accidents. They  need that                                                               
kind of independent analysis, and;                                                                                              
4. Develop a reporting requirement  for "near misses" which would                                                               
protect  confidential  business  information but  provide  enough                                                               
information  to ensure  that the  Ombudsman and  state regulators                                                               
would be able to detect problematic patterns of behavior.                                                                       
                                                                                                                                
She  also provided  the committee  with  some recommendations  on                                                               
spill  response   provided  to   me  by   conservation  community                                                               
colleagues with many years of experience in this area:                                                                          
1. Require  that there  be a relief  well drilling  capability at                                                               
the  ready   during  offshore  drilling  to   address  a  blowout                                                               
scenario.  Alaska has had several  blowouts in Cook Inlet in past                                                               
decades  and Arctic  blowouts during  shallow water  drilling are                                                               
possible;                                                                                                                       
2. Create a navigation system  equivalent to Prince William Sound                                                               
for  tankers and  other large  vessels in  Cook Inlet  and Unimak                                                               
Pass, including tug escorts;                                                                                                    
3.  Ensure that  abandoned  wells, pipelines,  and platforms  are                                                               
shut-in,  flushed,  and  removed, respectively.    One  exception                                                               
might be if  a platform could be used for  another purpose, e.g.,                                                               
to support renewable energy generation;                                                                                         
4. Require  c-plan holders to  enter into binding  contracts with                                                               
experienced and  capable responders,  and to list  spill response                                                               
assets in the region of the spill;                                                                                              
5.  Require   c-plans  to  provide  realistic   "Effective  Daily                                                               
Recovery Capacities," and;                                                                                                      
6. Given  the likelihood of  another eruption of Redoubt  and the                                                               
Drift River  terminal's problematic location, require  Cook Inlet                                                               
operators  to  install  a  pipeline  to  replace  the  terminal's                                                               
operations.                                                                                                                     
                                                                                                                                
11:58:58 AM                                                                                                                   
A  final comment  she said  is that  while Alaska  may have  high                                                               
standards,  they  still  are   inadequate.  The  Alaska  Response                                                               
Planning Standard, for example, is  nowhere close to addressing a                                                               
Deepwater Horizon size spill; it's  an order of magnitude too low                                                               
and  it's   required  for  too   few  days.  It's   important  to                                                               
acknowledge that oil spill cleanup  will be limited regardless of                                                               
the resources deployed by Shell  and others. She thought that was                                                               
even an area of agreement among the stakeholders.                                                                               
                                                                                                                                
CO-CHAIR  WIELECHOWSKI   thanked  her   for  her   testimony  and                                                               
introduced the next speaker, Ms. Wainwright.                                                                                    
                                                                                                                                
11:59:24 AM                                                                                                                   
NANCY  WAINWRIGHT, Senior  Staff Attorney,  Trustees for  Alaska,                                                               
commended this  committee on examining  this issue at  this time,                                                               
the  best  guarantee for  not  sustaining  future oil  spills  is                                                               
vigilance every  year to  ensure that  the state's  standards are                                                               
met and  lessons are learned  from other spills and  near spills.                                                               
She encouraged them to use this  as a beginning of having ongoing                                                               
review. She  said she would  focus on the current  capability and                                                               
limitations  of the  state's oil  spill  prevention and  response                                                               
statutes and recommendations.                                                                                                   
                                                                                                                                
Since 1980,  she said, the  Alaska legislature has  required that                                                               
oil  spill  contingency  plans   (c-plans)  have  best  available                                                               
technology  (BAT).   After  the   Exxon  spill   the  legislature                                                               
reconfirmed that BAT was required  for prevention and response in                                                               
Alaska. In  about 1997, the statute  was amended to say  that DEC                                                               
may prepare  findings and  make a list  of BAT  technologies that                                                               
are  considered best  available.  This change  has  proven to  be                                                               
somewhat  problematic. First,  DEC  held no  BAT conferences  for                                                               
many years,  and a search of  their website today reveals  a 2004                                                               
BAT conference that addressed a  limited set of technologies. The                                                               
findings for that  conference were not released  until 2006, when                                                               
they were already outdated.                                                                                                     
                                                                                                                                
12:03:39 PM                                                                                                                   
DEC  is under  budgetary constraints,  so unless  the legislature                                                               
mandates  that doing  a review  every  five years  and issuing  a                                                               
timely report  is a  priority, the  technologies will  forever be                                                               
outdated. One  example is that  leak detection for  pipelines was                                                               
addressed in 2004  and it is current applied. It  must be able to                                                               
detect 1  percent of  the daily throughput  of the  pipeline; yet                                                               
the  technology   exists  today  for  a   .5  percent  throughput                                                               
detection and it is occurring  at some operations in Alaska. It's                                                               
very important  that DEC update these  findings, and particularly                                                               
given the  North Slope  spills on  the pipeline  that there  be a                                                               
redundant leak detection system.                                                                                                
                                                                                                                                
The  way the  state handles  leak  detection is  to negotiate  at                                                               
every c-plan renewal  with the operators. This  puts a tremendous                                                               
burden  on  DEC;  so  they  recommend that  there  be  a  minimum                                                               
standard requirement  that DEC doesn't have  to renegotiate every                                                               
time a c-plan comes along.                                                                                                      
                                                                                                                                
MS.  WAINRIGHT recommended  a BAT  for ice-class  vessels in  the                                                               
Arctic. Right  now there are  none. Likewise, she  recommended an                                                               
Arctic-grade  oil spill  response  organization. Ozro  is an  oil                                                               
spill  response  organization and  is  certified  for rivers  and                                                               
offshore response but none for  the Arctic environment. After the                                                               
Gulf  spill, Alaska  should require  the best  and most  improved                                                               
blow out preventer  design and much of that  information is being                                                               
developed  by  the  federal  government at  this  time.  So,  she                                                               
recommended  that the  DEC not  wait years  to implement  it, but                                                               
instead  require  best  available  BOP today  and  more  frequent                                                               
testing and inspections.                                                                                                        
                                                                                                                                
12:06:00 PM                                                                                                                   
She said there have been  few, if any, unannounced spill response                                                               
drills in Alaska.  Even when the operators have  had knowledge of                                                               
the  drill being  called,  they have  frequently  failed to  meet                                                               
their response  requirements when  their c-plan is  tested. Those                                                               
exercises are  a learning  experience. Every  time they  have oil                                                               
spill  prevention   and  response  drill  it   is  improved.  She                                                               
recommended at least  one unannounced drill per  operator in each                                                               
c-plan  cycle of  the operator.  This would  ensure the  operator                                                               
would improve  by the next  c-plan.  She  recommended eliminating                                                               
or revising  that section so  that you don't allow  old out-dated                                                               
technology to meet the response planning standards.                                                                             
                                                                                                                                
One  of the  DEC response  planning standards  for wells  is 5500                                                               
barrels day times the number of  days it will take to control the                                                               
well. This  assumes a 15-day time  to control the well,  but that                                                               
is very  unrealistic if one  looks at  the Gulf of  Mexico spill.                                                               
This issue  needs to be  addressed in legislation to  insure that                                                               
the time for response to this  bill and the number of barrels per                                                               
day  assumed is  realistic and  not something  that is  developed                                                               
from theory.                                                                                                                    
                                                                                                                                
MS. WAINRIGHT said they recommend  also that there be no offshore                                                               
exploration allowed until there is  a drill rig vessel is present                                                               
and under  contract to drill  a relief well. And  the legislature                                                               
should consider  whether statutory changes are  needed to require                                                               
better  coordination  among  the  AOGCC regulation  of  blow  out                                                               
preventer devices with DEC's c-plan oversight role.                                                                             
                                                                                                                                
12:09:10 PM                                                                                                                   
BP's spill  in the Gulf  of Mexico  shows that the  commonly used                                                               
method in Alaska for skimmer  effectiveness is fatally flawed. BP                                                               
claims  there  that the  ability  to  recover more  than  491,000                                                               
barrels a  day and  they actually  deployed equipment  to contain                                                               
1.2 million barrels a day.  But they actually recovered only 1800                                                               
barrels a day.  So, again, realistic standards are  needed on the                                                               
ground. Drilling  and tests  would give  us those  more realistic                                                               
standards.                                                                                                                      
                                                                                                                                
12:10:00 PM                                                                                                                   
She  referred  again  to  the  2000/01  DEC  Minerals  Management                                                               
Service and USGS drill on the  North Slope that was referenced by                                                               
Dr. Short and  said that the North Slope Borough  ICAF and others                                                               
have  highlighted this  problem of  the inability  to respond  in                                                               
realistic conditions on  the North Slope. So, if  Alaska is going                                                               
to continue to  permit exploration and production  in areas where                                                               
ice may seasonally be present,  at the very least the legislature                                                               
should require strict seasonal  drilling restrictions or increase                                                               
preventative measures during those times.                                                                                       
                                                                                                                                
12:10:37 PM                                                                                                                   
MS.  WAINWRIGHT  said  some   recommendations  had  been  covered                                                               
before,  but  they recommend  zero  ballast  water discharge  for                                                               
tankers  with  ballast  water  originating   out  of  the  state,                                                               
particularly  in   state  critical  habitat   areas.  Smithsonian                                                               
research has found over a  dozen invasive species in Kachemak Bay                                                               
presumably  from  ballast  water.  Ensure  that  the  Cook  Inlet                                                               
terminal is not allowed to be  used any more for storage and that                                                               
a  pipeline be  installed instead.  Cook Inlet  fisheries deserve                                                               
the  same  protections as  those  in  Prince William  Sound,  and                                                               
therefore they  recommend that tug  escorts be mandatory  for all                                                               
large tankers.  They also recommend a  mandatory pipeline mapping                                                               
inspection  reporting  system  be  made available  at  the  Joint                                                               
Pipeline  Office so  that interested  members of  the public  and                                                               
regional  citizens'  advisory  councils can  review  where  those                                                               
pipelines are located and assist DEC in its oversight of them.                                                                  
                                                                                                                                
Finally,  Ms.   Wainwright  addressed  dispersants,   which  were                                                               
heavily  used in  the Gulf  of  Mexico. They  recommend that  the                                                               
state  work with  the Alaska  Regional Response  Team to  clearly                                                               
define when, where  and in what volumes dispersants  are safe and                                                               
effective. When the National c-plan  was first adopted the use of                                                               
COREXIT 9527  was allowed  in Alaska,  it had to  be at  least 50                                                               
percent  effective.  But  unfortunately laboratory  tests  showed                                                               
that dispersant was not effective  on North Slope's low crude; it                                                               
was only 30 percent effective.  So, they said well, we'll average                                                               
its effectiveness.  So, its effectiveness  on Louisiana  crude is                                                               
70 percent, on  North Slope crude it's 30 percent.  "Boom it's 50                                                               
percent effective, but  in fact it's not." You would  have to use                                                               
a lot more  dispersant.  So, whatever is used  in Alaska needs to                                                               
be tested for its effectiveness  in Arctic and cold conditions as                                                               
well as on the species present in its waters.                                                                                   
                                                                                                                                
REPRESENTATIVE GATTO  said the  term "best  available technology"                                                               
is almost  scary -  because it would  preclude big  projects from                                                               
ever getting built.  Within reason, he asked, do they  want to be                                                               
80 percent  of the best  or 90? It has  to be a  different number                                                               
than 100. Do you have a number?                                                                                                 
                                                                                                                                
MS. WAINWRIGHT  replied that she  didn't have a number,  but that                                                               
is  why the  technology forums  that the  legislature recommended                                                               
that  DEC have  are  so  important. "We  don't  want  to have  an                                                               
outlandish  BAT standard  that nobody  can  meet; we  want to  be                                                               
realistic."  When  you  get  good   minds  together,  have  those                                                               
conferences and come up with best recommended technology.                                                                       
                                                                                                                                
REPRESENTATIVE  JOHNSON  said  two  people  testified  that  they                                                               
should get rid  of the Drift River terminal and  build a pipeline                                                               
and asked  if she  would convince her  organization to  support a                                                               
pipeline if that is what happens.                                                                                               
                                                                                                                                
12:15:01 PM                                                                                                                   
MS. WAINWRIGHT  replied that  comment came from  a member  of her                                                               
staff, and they  would definitely work with  everyone to supplant                                                               
that terminal with a pipeline.                                                                                                  
                                                                                                                                
12:15:20 PM                                                                                                                   
lunch break                                                                                                                   
                                                                                                                                
1:35:28 PM                                                                                                                    
CO-CHAIR MCGUIRE  called the meeting  back to order at  1:35, and                                                               
announced  that that  the panel  from impacted  communities would                                                               
testify next.                                                                                                                   
                                                                                                                                
1:36:44 PM                                                                                                                    
HAROLD CURRAN, CEO,  speaking for Mayor Edward  Itta, North Slope                                                               
Borough,  said  the  ability  to  respond  to  an  oil  spill  is                                                               
constrained by  arctic conditions, including  prolonged darkness,                                                               
extreme   cold,   absence   of  or   remoteness   from   response                                                               
infrastructure  and equipment,  a  lack of  facilities to  house,                                                               
feed, and otherwise support large  numbers of response personnel,                                                               
and  -  perhaps  most  challenging -  extreme  and  variable  ice                                                               
conditions. Broken ice,  fall slush ice and  solid ice conditions                                                               
that  trap  oil  under  ice  or  in  amongst  ice  flows  make  a                                                               
successful oil  spill response  unlikely with  existing equipment                                                               
and technologies. Their  primary goal is to try  and put measures                                                               
in place to keep oil from being spilled.                                                                                        
                                                                                                                                
Their first  recommendation is to upgrade  blowout preventers and                                                               
well  pressure  control devices  to  insure  best technology  and                                                               
practices are  used including type of  control, secondary control                                                               
of that  system, inspection maintenance  and repair  program. You                                                               
can't  just   assume  that  these   systems  are  in   place  and                                                               
functioning well. The Gulf of Mexico has demonstrated that.                                                                     
                                                                                                                                
Upgrade blowout  preventer and well  pressure control  devices to                                                               
ensure  best technology  and practices  are used,  including: the                                                               
type  of  control  system;  secondary  control  of  that  system;                                                               
inspection; maintenance; and repair programs.                                                                                   
                                                                                                                                
BOPs  must have  two  sets of  blind shear  rams  to prevent  BOP                                                               
failure.  They  must  have  reliable  emergency  back-up  control                                                               
systems  and  immediate  access to  sufficient  remote  operating                                                               
vehicles to manually activate a subsea BOP if needed.                                                                           
                                                                                                                                
BOPs should be required to be  tested more frequently, 7 days, as                                                               
opposed  to every  14 days,  which is  the interval  that is  the                                                               
normal  standard  today.  They  also  would  like  BOPs  to  have                                                               
reliable emergency backup  control systems; so it's  not just the                                                               
preventer itself,  but the control  systems that  are duplicated.                                                               
They also want immediate access  to vehicles to manually activate                                                               
a BOP if  needed. If a subsea blowout preventer  is used, require                                                               
a  second redundant  blowout preventer  on the  floating drilling                                                               
unit,  when technically  feasible. So,  they are  asking for  two                                                               
BOPs. They are also recommending  codifying a minimum two-barrier                                                               
policy - two BOPs and two barriers.                                                                                             
                                                                                                                                
Seasonal  drilling  should  be  used  in  the  OCS  where  it  is                                                               
effective  to  prevent  offshore  oil spills  during  broken  ice                                                               
conditions.  Offshore   pipelines  should  be  required   as  the                                                               
transportation method  for the Arctic  Ocean. Industry has  a lot                                                               
of information on where the major  spills come from, and in terms                                                               
of industry spills it comes  from tankers. So, tankers should not                                                               
be used.                                                                                                                        
                                                                                                                                
There  are   some  risks   with  pipelines   and  so   they  have                                                               
recommendations to  try to address  those. One is to  codify that                                                               
offshore pipelines must  be buried below ice  gouging and strudel                                                               
scour depths.  Industry as a  matter of practice does  testing to                                                               
find out  what those depths are  and generally plans to  do that,                                                               
but it ought  to be codified. They  recommend requiring redundant                                                               
leak detection  systems for offshore pipelines  and updating leak                                                               
detection  standards to  reflect  best  available technology;  if                                                               
dispersants are  to be  used they should  be tested  to determine                                                               
whether they  are safe or  not. Once tested and  determined safe,                                                               
they ought to  be pre-approved. Using dispersants in  the Gulf of                                                               
Mexico was very controversial and  there were many time delays in                                                               
justifying  their  use.  Arctic   oil  spill  response  equipment                                                               
standards  should  be established;  a  lot  of equipment  doesn't                                                               
function  well in  the  Arctic. A  same-season  relief well  plan                                                               
should  be  required just  like  the  Canadians have.  Shell  has                                                               
relief well plans, but they ought to be required.                                                                               
                                                                                                                                
1:43:03 PM                                                                                                                    
MR.  CURRAN said  they would  like to  see worse  case oil  spill                                                               
planning and  not go  light in  terms of how  long it's  going to                                                               
take to  drill a relief well  or the quantities of  oil that will                                                               
be discharged during that time period.  If you don't plan for the                                                               
worst  then you  will  just aggravate  that possibility.  Require                                                               
well  blowout  containment equipment  or  caps  on subsea  wells.                                                               
Equipment  should be  onsite or  readily  available nearby  along                                                               
with the expertise to safely deploy  it and use it effectively. A                                                               
cap or top hat is what BP eventually  used on its BOP. It can sit                                                               
down over the well and capture the  oil so that it can be brought                                                               
up to the surface and put in a container.                                                                                       
                                                                                                                                
1:44:02 PM                                                                                                                    
Oil spill response:  Require a signed contract for  a relief well                                                               
rig, with  trained and qualified  personnel and  equipment needed                                                               
to drill  the relief  well. All  of that  will make  the response                                                               
more effective  and timely. Require  an operator to plan  for the                                                               
Absolute  Open Flow  Potential (AOFP)  for  an uncontrolled  well                                                               
blowout with  no backpressure. Alaska's  default blowout  rate of                                                               
5,500  bbl/day (wells  in  Cook  Inlet plus  wells  on the  North                                                               
Slope) for  exploration wells  needs to  be increased  to account                                                               
for higher  rate Arctic wells. The  average is not fair  to wells                                                               
in  Cook  Inlet which  could  have  less deliverability,  and  it                                                               
undermines  proper   planning  for   North  Slope   wells,  which                                                               
generally exceed that.                                                                                                          
                                                                                                                                
MR. CURRAN said  three assembly members went down to  the Gulf of                                                               
Mexico and talked to local  representatives and elected officials                                                               
from the  communities in Louisiana  and asked what they  would do                                                               
differently. This is their list of activities:                                                                                  
•Inventory of boats available in coastal communities                                                                            
•Train boat operators and crews                                                                                                 
•Train beach responders                                                                                                         
•Evaluate disposal locations                                                                                                    
•Develop a chain of command and response plan                                                                                   
•Plan for additional fuel needs                                                                                                 
•Enhance Coast Guard presence on the North Slope                                                                                
                                                                                                                                
Having  the infrastructure  in  place is  important  - if  you're                                                               
going to  mobilize people to respond  to an oil spill,  they have                                                               
to stay somewhere. You're not going to  put them in a tent on the                                                               
North Slope in Arctic conditions.  It's very important to provide                                                               
them with beds, food, and a  heated facility if they are going to                                                               
function properly.                                                                                                              
                                                                                                                                
1:46:27 PM                                                                                                                    
REPRESENTATIVE  GUTTENBERG  asked  if he  thought  best  industry                                                               
standards needed more clarification.                                                                                            
                                                                                                                                
MR. CURRAN answered that a  lot of their recommendations are best                                                               
industry  standards.  They have  looked  at  other countries  and                                                               
Arctic nation and have found good standards.                                                                                    
                                                                                                                                
1:49:09 PM                                                                                                                    
REPRESENTATIVE   GUTTENBERG   asked   where  the   coastal   zone                                                               
management stops offshore.  Does it include a drill  rig a couple                                                               
miles off?                                                                                                                      
                                                                                                                                
MR. CURRAN  replied that whatever  is done in  the OCS has  to be                                                               
consistent with  the state plan  if it  has been approved  by the                                                               
federal government. It's  not an absolute standard,  but if there                                                               
is a  conflict between federal  law and the state's  coastal zone                                                               
management program, then there is  an administrative process that                                                               
occurs in the Department of Commerce.                                                                                           
                                                                                                                                
REPRESENTATIVE GUTTENBERG asked  if that process is  in place for                                                               
the North Slope Borough.                                                                                                        
                                                                                                                                
MR.  CURRAN  answered  they  don't   have  an  approved  district                                                               
program.                                                                                                                        
                                                                                                                                
CO-CHAIR MCGUIRE  asked him to  review the North  Slope Borough's                                                               
efforts over the Interim to  prepare for the Northern Waters Task                                                               
Force meeting on  October 1, so that Alaskans  know generally how                                                               
he is  fairing with  the state's neighbors  who will  arguably be                                                               
the  most  impacted  by  development  in  negotiations  with  the                                                               
federal and state governments.                                                                                                  
                                                                                                                                
MR. CURRAN prefaced that by  saying that whatever happened in the                                                               
Gulf of  Mexico has  changed the playing  field. But,  since 2007                                                               
they  have  been in  negotiations  with  Shell on  discharge  and                                                               
baseline science issues,  and they have been  responsive on both.                                                               
They are close to signing an  agreement with them where they will                                                               
fund some  baseline science  that would be  managed by  the North                                                               
Slope Borough. On  discharge they have orally  indicated they may                                                               
modify  their proposals  to reduce  the amount  of discharge  for                                                               
their drilling activities.                                                                                                      
                                                                                                                                
In terms  of what used  to be MMS, Mr.  Curran said, he  sat down                                                               
with  them  about  three  days  before the  Gulf  of  Mexico  and                                                               
developed an  MOU to try  negotiate eight points that  Mayor Itta                                                               
had  identified that  should occur  in the  OCS to  see if  those                                                               
could be addressed administratively  as opposed to legislatively.                                                               
They were slowed down as a result  of the Gulf of Mexico, but are                                                               
committed  to following  up on  that.  Also, he  hoped that  BOEM                                                               
would require  the same mitigation  of impacts to hunting  of the                                                               
Bowhead whale that has been put  into their permits for the first                                                               
time last summers.                                                                                                              
                                                                                                                                
MR.  CURRAN said  response is  being seen  from both  the federal                                                               
government and industry. He said  the NSB is a cooperating agency                                                               
with the BLM in  its area-wide EIS for the NPRA,  as well as with                                                               
AEC [Army  Environmental Command] with  NMFS and its  analysis of                                                               
trying to mitigate impacts to  marine mammals in the Arctic Ocean                                                               
for future oil  and gas activities. But he still  thinks more can                                                               
be done.                                                                                                                        
                                                                                                                                
1:52:54 PM                                                                                                                    
CO-CHAIR MCGUIRE said there is  a perception that the North Slope                                                               
Borough opposes drilling or any kind  of activity in the OCS, but                                                               
that hasn't  been her experience.  Rather it's that they  want it                                                               
done right.                                                                                                                     
                                                                                                                                
MR.  CURRAN added  that the  Mayor knows  the Borough  ultimately                                                               
doesn't  get   to  make   decisions  about   ANWR  or   OCS,  and                                                               
understanding that  the federal  government will make  a decision                                                               
to  go into  the  OCS, they  are  putting a  lot  of energy  into                                                               
improving the standards.  Their preference is still  that oil and                                                               
gas that  is available on  land be explored and  developed before                                                               
anybody goes in the OCS.                                                                                                        
                                                                                                                                
1:54:46 PM                                                                                                                    
MIKE  MUNGER, Executive  Director, Cook  Inlet Regional  Citizens                                                               
Advisory Council,  thanked the committee  for the  opportunity to                                                               
speak  this afternoon.  He said  their board  is comprised  of 13                                                               
members.  Municipality  members   represent  the  communities  of                                                               
Anchorage, Kenai,  Homer, Seldovia,  and Kodiak; also  the Kodiak                                                               
Island and Kenai Peninsula  Boroughs. Stakeholder members include                                                               
the  Alaska  State  Chamber of  Commerce,  representing  tourism,                                                               
commercial   fishing,   aquaculture,  Native,   recreation,   and                                                               
environmental  organizations.   Cook  Inlet   Regional  Citizen's                                                               
Advisory Council's mission is to  represent the citizen's of Cook                                                               
Inlet  in promoting  environmentally  safe marine  transportation                                                               
and oil facility operations in  Cook Inlet.  Oil spill prevention                                                               
and response are key focuses for the Council.                                                                                   
                                                                                                                                
He  said the  Senate Resources  Committee's interest  in Alaska's                                                               
oil  spill preparedness  and response  capacity is  very much  in                                                               
line  with the  Council's.  In  fact, it  has  just undertaken  a                                                               
project to review  Alaska oil spill statutes  and regulations and                                                               
to develop recommendations for possible  changes. That project is                                                               
on a  fast track.  His comments would  be followed-up  in writing                                                               
once the project is completed.                                                                                                  
                                                                                                                                
1:56:11 PM                                                                                                                    
First  question:   How  would  they   assess  Alaska   oil  spill                                                             
preparedness? Alaska  is one of  the best prepared states  in the                                                               
US. Yet, there is room for improvement.                                                                                         
                                                                                                                                
They have  four very capable primary  response action contractors                                                               
-  CISPRI, SERVS,  ACS, and  Alaska Chadux  - with  an impressive                                                               
array  of  equipment  and  highly  trained  responders.  Alaska's                                                               
current response capability  is one of the highest  in the world.                                                               
However,  everyone  needs to  realize  that  no matter  how  much                                                               
response  equipment and  how many  responders are  required there                                                               
will never be  an adequate response to a  catastrophic spill like                                                               
the  one in  the  Gulf  of Mexico.  The  realities  of the  harsh                                                               
environment in Alaska and the basic  physics of oil on the water,                                                               
means  that it  is not  possible  to put  the genie  back in  the                                                               
bottle. Mr.  Munger said we  have to be  prepared to do  the best                                                               
job humanly  possible and we have  to require a robust  oil spill                                                               
response  system,  but  we  must   place  our  primary  focus  on                                                               
preventing a major spill from occurring in the first place.                                                                     
                                                                                                                                
1:57:37 PM                                                                                                                    
Second question:  What changes, if  any, would you make  to state                                                             
laws,  regulations,   procedures  or   budgets  to   improve  our                                                               
preparedness and response capability? His response was:                                                                         
                                                                                                                                
Continuous Improvement:  Our current  laws and regulation  do not                                                             
adequately  force continuous  improvement of  oil spill  response                                                               
technology.  There should  be  incentives  for developing  better                                                               
response  technologies.  The  issue  is not  that  we  need  more                                                               
equipment;  the issue  is we  need better  equipment. There  is a                                                               
Best  Available  Technology  (BAT) analysis  requirement  in  the                                                               
Alaska Department  of Environmental Conservation  regulations but                                                               
it does not  apply to response equipment used to  meet a response                                                               
planning  standard.  As  long  as the  c-plan  holder  meets  the                                                               
standard,  their equipment  is considered  BAT. This  removes any                                                               
incentive for continuous improvement.                                                                                           
                                                                                                                                
There  are a  few exceptions,  but for  the most  part the  spill                                                               
response technology being used today  has not changed in the last                                                               
20  years.  Whether  it  is funded  directly  or  incentives  are                                                               
created,  focus should  be on  more research  and development  in                                                               
spill  response   technology.  One  exception  he   considered  a                                                               
significant  improvement  was  the   fuzzy  disc  skimmer  system                                                               
recently  brought to  Alaska.  This has  a  high volume  recovery                                                               
capacity  but  its greatest  feature  is  virtually no  water  is                                                               
recovered  during  the  operation.  He explained  that  on  water                                                               
temporary storage  of recovered oil  is always a large  factor in                                                               
spill response.  The skimmer  was brought  to Alaska  through the                                                               
efforts of Tesoro. CISPRI, the  response action contractor in the                                                               
Cook  Inlet  area, has  recently  received  four of  the  skimmer                                                               
systems to complement their response inventory.                                                                                 
                                                                                                                                
Equipment  Standards:  We  should  also look  at  requiring  plan                                                             
holders to  utilize equipment that  meets minimum  standards. The                                                               
American Society  for Testing and Materials  (ASTM) has developed                                                               
standard testing  protocols for  booms and  skimmers. Contingency                                                               
plans utilizing boom or skimmers  that have not been tested using                                                               
these protocols and  found to meet a minimum  standard should not                                                               
be approved.                                                                                                                    
                                                                                                                                
Field Trials:  The development of  full-scale trials  designed to                                                             
measure the  limitations and effectiveness of  an entire response                                                               
system,  such as  an  open-water recovery  task  force should  be                                                               
encouraged. The  capability of the  task force is limited  by its                                                               
weakest component; that weak component  might be people, vessels,                                                               
boom, or skimmers,  but without trials, they won't  know and they                                                               
can't be fixed.                                                                                                                 
                                                                                                                                
2:00:16 PM                                                                                                                    
Oil  Well Blowout  Planning: He  recommended  that oversight  and                                                             
approval responsibility for well  control and blowout planning be                                                               
transferred from the ADEC to  the Alaska Oil and Gas Conservation                                                               
Commission  (AOGCC). AOGCC  is responsible  for  the approval  of                                                               
normal  drilling operations  and it  only makes  sense that  they                                                               
would be  responsible for  the review  and approval  of emergency                                                               
response  plans for  blowouts. AOGCC  has  drilling engineers  on                                                               
staff and  ADEC does not,  so the proper expertise  for reviewing                                                               
well  control  plans  is  in the  Commission.  Given  the  recent                                                               
blowout event in  the Gulf of Mexico, we probably  need to review                                                               
our standards for emergency well  control plans, but this process                                                               
should not begin until the  responsibility is transferred between                                                               
agencies.                                                                                                                       
                                                                                                                                
Unannounced Drills: Many people use  the terms exercise and drill                                                             
interchangeably, and  in fact they  are not distinguished  in the                                                               
current laws and regulations. But  they are different things with                                                               
different  purposes. An  exercise is  planned ahead  and everyone                                                               
knows it  is coming;  it is valuable  for training  and practice,                                                               
but it  is not a  test of response  readiness. On the  other hand                                                               
drills  should  be  unexpected  and  designed  to  test  response                                                               
capability. Currently  too few unannounced drills  are conducted,                                                               
because ADEC does  not have enough resources to  plan and conduct                                                               
them.                                                                                                                           
                                                                                                                              
Funding:  They  strongly  support   more  funding  for  the  ADEC                                                             
Division of  Spill Prevention and  Response. Their  staff reviews                                                               
contingency plans,  conducts inspections and  unannounced drills,                                                               
and responds  to actual  spill events.   Like most  agencies they                                                               
have  seen their  budgets cut  in the  past few  years.   Without                                                               
adequate  funding,  none of  our  other  recommendations will  be                                                               
implemented.                                                                                                                    
                                                                                                                                
CO-CHAIR MCGUIRE asked if any other authority would work.                                                                       
                                                                                                                                
MR. MUNGER  answered they see this  as the natural thing  and now                                                               
the DEC doesn't have that. The review needs to be finished.                                                                     
                                                                                                                                
2:03:38 PM                                                                                                                    
MARK SWANSON,  Executive Director, Prince William  Sound Regional                                                               
Citizens Advisory  Council (RCAC),  said in  the RCAC  was formed                                                               
after the Exxon Valdez oil  spill to provide citizen oversight of                                                               
crude oil  transportation in Prince  William Sound. In  1994, the                                                               
Alaska Legislature passed  a law that included  a requirement for                                                               
a  review of  best available  oil spill  prevention and  response                                                               
technology each time an Oil  Discharge Prevention and Contingency                                                               
Plan (more commonly  called a contingency plan)  is approved. The                                                               
goal of the 1994 law was  to ensure continuous improvement of oil                                                               
spill prevention and response technology in Alaska.                                                                             
                                                                                                                                
He said  Alaska's laws and  regulations requiring  best available                                                               
technology   assessment   and   implementation  for   oil   spill                                                               
prevention  have resulted  in a  number of  oil spill  prevention                                                               
improvements  across Alaska.  In Prince  William Sound,  the most                                                               
notable  oil spill  prevention improvement  came in  the form  of                                                               
today's  tug  escort  system, along  with  improvements  to  leak                                                               
detection technology, corrosion  control, tank overfill controls,                                                               
and improved  maintenance practices.  However, Alaska's  laws and                                                               
regulations requiring  BAT assessment and implementation  for oil                                                               
spill response have not yielded comparable improvements.                                                                        
                                                                                                                                
State statutory  amendments in 2002 and  regulatory amendments in                                                               
2004 eliminated  the requirement to conduct  a rigorous technical                                                               
and  economic assessment  of Best  Available Technology  for most                                                               
mechanical   oil   spill  response   equipment.These   amendments                                                               
affected  skimmers,   booms,  and  other  mechanical   oil  spill                                                               
response  equipment   required  to  meet  the   state's  Response                                                               
Planning Standard.  This standard  requires operators to  be able                                                               
to contain, control, and clean  up 300,000 barrels of spilled oil                                                               
in  Prince William  Sound within  72 hours.  Today, the  only oil                                                               
spill  response equipment  and procedures  required to  undergo a                                                               
rigorous  BAT  assessment  are:  communications;  source  control                                                               
procedures;  trajectory analysis  and  forecasting; and  wildlife                                                               
capture, treatment and release programs.                                                                                        
                                                                                                                                
2:06:13 PM                                                                                                                    
The  ADEC's   2004  regulatory  amendments  weakened   oil  spill                                                               
response requirements  by allowing  operators to  substitute non-                                                               
mechanical  response techniques  for  mechanical response  during                                                               
severe weather.  This change was  made despite the fact  that the                                                               
Prince  William Sound  Regional  Citizens'  Advisory Council  and                                                               
other  stakeholders oppose  chemical dispersant  use, which  is a                                                               
primary    non-mechanical    response    tactic.    Additionally,                                                               
dispersants and  in situ  burning (another  common non-mechanical                                                               
response technique involving the burning  of spilled oil while it                                                               
is  still on  the  water)  suffer from  the  same limitations  as                                                               
mechanical response equipment in severe weather.                                                                                
                                                                                                                                
The  steady  erosion of  the  state's  best available  technology                                                               
requirements  over the  past 16  years  has left  Alaska with  an                                                               
arsenal of  oil spill  response equipment  based largely  on late                                                               
1990s technology.  Minor improvements have been  made voluntarily                                                               
by  some  c-plan holders,  but  the  ADEC  has not  compelled  or                                                               
alternatively  provided adequate  incentives to  tanker operators                                                               
and other contingency plan holders  to drive more significant and                                                               
much needed updates and changes.                                                                                                
                                                                                                                                
If Alaska  is to be  held up as the  "gold standard" for  BAT for                                                               
oil spill prevention and response  equipment, the state will need                                                               
to revise its laws and regulations  to require that all oil spill                                                               
response  equipment-  including  skimmers,  booms,  and  response                                                               
vessels-undergo a  Best Available Technology assessment  at least                                                               
once every five years (each  time a contingency plan is renewed),                                                               
and to  require that  enhanced oil  spill prevention  measures be                                                               
taken  during periods  when even  the  best available  mechanical                                                               
response technology cannot operate.                                                                                             
                                                                                                                                
In addition to the problems  just outlined, the state Division of                                                               
Spill  Prevention   and  Response,   which  is   responsible  for                                                               
enforcing  Alaska's  regulations  on  oil  spill  prevention  and                                                               
response,   faces  an   ever-worsening   funding  shortage.   The                                                               
division's  budget  is tied  to  a  per-barrel surcharge  on  oil                                                               
production in Alaska,  which is steadily declining.  As a result,                                                               
the  division's funding  is steadily  being reduced,  even though                                                               
its workload is not.                                                                                                            
                                                                                                                                
Recommendations:                                                                                                              
-Require  all   equipment  including  individual   components  of                                                               
recovery  systems  used  to  meet  the  state  response  planning                                                               
standards and undergo a best available technology review.                                                                       
- Require contingency plan holders  to inspect, test, and certify                                                               
that all  Response Planning Standard equipment  is Best Available                                                               
Technology.                                                                                                                     
- Within 30  days of a spill response, require  c-plan holders to                                                               
re-inspect and test Response Planning  Standard equipment used in                                                               
the  response  to  verify  it   remains  suitable  for  continued                                                               
service.                                                                                                                        
-  Require c-plan  holders to  inspect, test,  clean, and  repair                                                               
equipment  on   a  state-approved  schedule  as   part  of  their                                                               
contingency plans.                                                                                                              
- Require that  Response Planning Standard equipment  not be over                                                               
20  years  of age  unless  it  has  been inspected,  tested,  and                                                               
certified by the Alaska  Department of Environmental Conservation                                                               
as suitable for continued use.                                                                                                  
-  Require that  enhanced oil  spill prevention  measures-such as                                                               
double  booming  or  daylight-only  operations-be  negotiated  in                                                               
advance  and  enforced  when  weather  is  too  severe  for  Best                                                               
Available Technology mechanical response equipment to operate.                                                                  
-  Clarify in  regulation that  the contingency  planning process                                                               
does  not  allow non-mechanical  response  techniques  - such  as                                                               
dispersants  and  in situ  burning  -  to  be  used to  meet  the                                                               
Response  Planning Standard,  and that  only mechanical  response                                                               
equipment can be used to meet the Response Planning Standard.                                                                   
-  Consider increased  financial  incentives to  plan holders  to                                                               
enhance spill response capabilities  outside the normal five year                                                               
plan cycle.                                                                                                                     
- Provide  inflation-adjusted funding  for the state  Division of                                                               
Spill  Prevention  and Response  to  ensure  it has  an  adequate                                                               
budget to meet its responsibilities.                                                                                            
                                                                                                                                
2:10:07 PM                                                                                                                    
REPRESENTATIVE  GUTTENBERG  asked how  accurate  it  is now  that                                                               
Alaska is the gold standard.                                                                                                    
                                                                                                                                
MR. SWANSON replied it remains  very accurate. Standards are much                                                               
higher  in  Alaska  than  anywhere   else  in  the  nation.  Most                                                               
equipment works  well in good weather  but not in bad  weather or                                                               
icy conditions.                                                                                                                 
                                                                                                                                
2:12:00 PM                                                                                                                    
five minute break                                                                                                               
                                                                                                                                
2:23:57 PM                                                                                                                    
CO-CHAIR WIELECHOWSKI  called the meeting  back to order  at 2:23                                                               
and announced that the state agencies' panel would comment next.                                                                
                                                                                                                                
2:24:21 PM                                                                                                                    
LARRY   HARTIG,   Commissioner,   Department   of   Environmental                                                               
Conservation (DEC), said he would  provide an overview of how DEC                                                               
addresses the  risk of a major  crude oil spill to  marine waters                                                               
in Alaskan, and in light  of the additional information that will                                                               
be coming  in from  the expert  panels looking  into the  Gulf of                                                               
Mexico spill, where they  anticipate putting additional attention                                                               
as  DEC continues  to  reduce the  risk of  crude  oil spills  in                                                               
Alaska waters.  They must  reduce the  probability of  the events                                                               
that could  lead to a spill  and be prepared to  contain, control                                                               
and the stop the flow of oil quickly if a spill occurs.                                                                         
                                                                                                                                
COMMISSIONER HARTIG said  his overview would be  broken down into                                                               
four parts:                                                                                                                     
•  A  quick  summary  of   the  legal  framework  that  allocates                                                               
responsibilities among  the regulated community, and  federal and                                                               
state agencies;                                                                                                                 
• The primary  measures implemented by DEC to reduce  the risk of                                                               
spills;                                                                                                                         
•  The primary  response measures  in  place to  prepare for  and                                                               
respond to marine spills in Alaska; and                                                                                         
• A  summary of  areas where  they  will  likely be  focusing our                                                               
attention as reports stemming from the Gulf spill are reviewed.                                                                 
                                                                                                                                
2:26:47 PM                                                                                                                    
COMMISSIONER HARTIG said  the incident in the Gulf  was a wake-up                                                               
call to the Nation. It reminds  us of the need for vigilance. But                                                               
it is also important to be mindful that:                                                                                        
• The systems and measures we  have in place in Alaska to prevent                                                               
and respond to marine spills  have been developed over decades by                                                               
people with  Alaska experience and  expertise, and we  don't want                                                               
to make  unnecessary changes or  import something new  that won't                                                               
work here;                                                                                                                      
•  In  many  areas,  spill   prevention  and  response  are  very                                                               
technical  areas and  any  changes we  might  consider should  be                                                               
supported by good science and engineering, and                                                                                  
• There  is a tremendous amount  of work underway by  some of the                                                               
best experts  in the Nation to  look at oil spill  prevention and                                                               
response, and  we should take that  body of work into  account as                                                               
we decide  which lessons apply here  and the best way  to respond                                                               
to them.                                                                                                                        
                                                                                                                                
2:28:13 PM                                                                                                                    
LEGAL FRAMEWORK:                                                                                                              
A  prerequisite to  assessing Alaska's  oil spill  risks and  our                                                               
capacity to  respond is an  understanding of the  legal framework                                                               
that  governs who  is  responsible,  who is  liable,  and who  is                                                               
required  to  respond.  Both  the  federal  and  state  statutory                                                               
frameworks  require  that  the  "spiller"  or  responsible  party                                                               
immediately respond  and contain, control  and clean up  a spill.                                                               
He  commented that  many people  thought the  Coast Guard  had an                                                               
armada  of spill  responders that  would be  immediately launched                                                               
for a  big spill,  where actually under  federal law  the spiller                                                               
has that  responsibility and  the Coast  Guard has  oversight and                                                               
coordinating responsible.                                                                                                       
                                                                                                                                
Certain  facilities,  such  as  oil  terminals,  exploration  and                                                               
production facilities, pipelines, tank  vessels, non tank vessels                                                               
and, in  Alaska, the  railroad, are further  required to  have an                                                               
"oil  discharge  prevention and  contingency  plan"  and to  meet                                                               
"financial  responsibility" standards  set by  state statute  and                                                               
regulation.                                                                                                                     
                                                                                                                                
Oil spill c-plans detail spill  prevention measures and equipment                                                               
that must  be in  place. They also  specify a  "response planning                                                               
standard," which  is the size  of spill and the  conditions under                                                               
which an  operator must be  prepared to  respond to a  spill. The                                                               
response   planning  standard   dictates  the   requirements  for                                                               
equipment, vessels  and trained personnel the  operator must have                                                               
available and be ready to contain, control and clean up a spill.                                                                
                                                                                                                                
Spill response is regulated by  the state and federal government.                                                               
If  a response  is  inadequate, the  governments  may augment  or                                                               
direct the response. The state  or federal response organizations                                                               
are able  to augment a  response typically by engaging  their own                                                               
spill response  contractors looking  outside the state  for help,                                                               
or bringing their own resources to bear.                                                                                        
                                                                                                                                
2:30:17 PM                                                                                                                    
PREVENTION:                                                                                                                   
There are  a number  of ways  DEC strives to  reduce the  risk of                                                               
crude oil spills:                                                                                                               
1)  Identifying  or  developing  technical  standards  and  other                                                               
requirements to  assure the integrity of  critical equipment used                                                               
in the storage and transport of crude oil;                                                                                      
2)   Incorporating  these   requirements   into  regulations   or                                                               
contingency plan approvals;                                                                                                     
3) Reviewing and inspecting records,  operations and equipment to                                                               
assure compliance with applicable requirements; and                                                                             
4)   Instituting  enforcement   actions  as   needed  to   compel                                                               
compliance.                                                                                                                     
                                                                                                                                
2:30:58 PM                                                                                                                    
COMMISSIONER  HARTIG explained  that in  the marine  environment,                                                               
DEC shares  jurisdiction with other  federal and  state agencies.                                                               
On  the  Outer Continental  Shelf  (OCS),  the federal  agencies,                                                               
including the  Bureau of Ocean Energy  Management, Regulation and                                                               
Enforcement (BOEM) (formerly MMS),  have primary if not exclusive                                                               
jurisdiction.  However, DEC  spill prevention  requirements still                                                               
apply in  the OCS through  the Alaska Coastal  Management Program                                                               
(ACMP).  They must  show consistency  with the  ACMP plans  which                                                               
incorporate  their c-plans.  In  state waters  and on-shore,  DEC                                                               
strives  to  prevent  spills through  requirements  contained  in                                                               
regulations and state-approved c-plans.                                                                                         
                                                                                                                                
Regulatory  requirements   have  been  developed   for  training,                                                               
transfer  operations,   laden  tank   vessels  and   oil  barges,                                                               
exploration  and production  facilities,  flow  lines, crude  oil                                                               
transmission  pipelines,  storage   tanks,  facility  piping  and                                                               
secondary containment, all of which  may be incorporated into the                                                               
c-plan  requirements.  Both DEC's  approval  of  c-plans and  the                                                               
comparable ACMP process that extends  state requirements into the                                                               
OCS include  a public process.  The public has an  opportunity to                                                               
review and comment in advance of any final decision by DEC.                                                                     
                                                                                                                                
2:32:16 PM                                                                                                                    
PREPAREDNESS:                                                                                                                 
Response  preparedness activities  are  also  included in  c-plan                                                               
requirements. Facilities  with contingency  plans are  subject to                                                               
inspections, drills, exercises, and  table top drills. In Alaska,                                                               
as at the  national level, the spiller and the  state and federal                                                               
governments  use  the  incident   command  system  (ICS)  as  the                                                               
response management framework. Typically  you would see DEC, EPA,                                                               
the Coast  Guard, the RCAC,  local officials and the  spiller and                                                               
their contractor all be centralized  in one facility managing the                                                               
response  together.  He  said,  also,  unique  to  Alaska  is  an                                                               
emergency  response  fund  of  $50 million  paid  for  through  a                                                               
conservation surcharge on crude oil  produced in the state, which                                                               
is available to  the state to respond to spills.  In the event of                                                               
a large spill, one  of the first things that happen  is he gets a                                                               
memo  from the  division director  saying this  is the  estimated                                                               
cost to the  response asking to tap the fund.  If appropriate, he                                                               
would authorize tapping the fund;  notice goes to the legislature                                                               
and the governor.                                                                                                               
                                                                                                                                
2:33:46 PM                                                                                                                    
COMMISSIONER  HARTIG  said  they   have  been  strengthening  the                                                               
state's c-plan  requirements ever  since the Exxon  Valdez spill.                                                               
Progress has been made in many  areas over the last 20 years. The                                                               
steps in this process include:                                                                                                  
-   Evaluation  of   general   response  procedures,   deployment                                                               
strategies and  response strategies. State law  requires applying                                                               
best  available   technology  in   the  review  of   for  certain                                                               
components  of the  c-plan, and  they  hold a  BAT conference  at                                                               
least every five years. A year  or two ago they held a conference                                                               
on  digging and  corrosion  issues relating  to  the North  Slope                                                               
events.                                                                                                                         
- Evaluation  of technologies and their  application to determine                                                               
they are the best available.                                                                                                    
-  Establishment  of response  planning  standards  based on  the                                                               
maximum and  most damaging oil  discharge that could  occur based                                                               
on the size, location, capacity  and analysis of possible mishaps                                                               
during the lifetime  of the facility or vessel.  Today they heard                                                               
that there  is a  5500 barrel per  day response  plan requirement                                                               
that was  based on the average  flows at the time  from oil being                                                               
produced in Alaska  when the standard was set. But  they have the                                                               
ability  to go  back  with  AOGCC help  and  look  at the  actual                                                               
reservoir pressures and what the  flow might be from a particular                                                               
reservoir and adjust that and adjust the c-plan requirement.                                                                    
-  Evaluation of  incident management  teams, equipment,  vessels                                                               
and  trained  personnel  to  immediately   respond  to  meet  the                                                               
established   response  planning   standards  and   other  c-Plan                                                               
requirements. He said the state  also has a unique requirement in                                                               
the case of exploratory and  development wells; the c-plan holder                                                               
must have a  plan in place to regain well  control within 15 days                                                               
of loss of well control.                                                                                                        
- In  the case of  exploratory and development wells,  the c-plan                                                               
holder also  must have  a plan  in place  to regain  well control                                                               
within  15 days  of  loss  of well  control.  They are  currently                                                               
looking for recommendations. DEC  regulations require having a c-                                                               
plan,  but it  has no  review process  yet. However,  the DEC  is                                                               
probably  not the  right agency  to do  that and  would defer  to                                                               
AOGCC (either give  it to them and their answer  back or transfer                                                               
authority to them).                                                                                                             
                                                                                                                                
2:35:28 PM                                                                                                                    
COMMISSIOHNER HARTIG  said they continue  to learn from  the Gulf                                                               
event and are looking at recommending changes to:                                                                               
•  Accuracy and  methods  for estimating  crude  oil flow  rates,                                                               
which  form the  basis  for the  response  planning standard  and                                                               
planning a response, from exploration and production wells;                                                                     
• Technologies for regaining control of a blowout;                                                                              
•  Planning and  resource  requirements to  respond  to a  "worst                                                               
case" spill; and                                                                                                                
• Evaluation  of mechanical and  non mechanical  (dispersants and                                                               
in situ burning) technologies for oil recovery or dispersion.                                                                   
                                                                                                                                
He  said they  are  considering the  advisability  of having  the                                                               
ability  to  quickly  deploy dispersants  that  were  used  quite                                                               
extensively in  the Gulf, more than  at any other time.  They are                                                               
very interested in what the long-term benefits and effects are.                                                                 
                                                                                                                                
Again,  the  commissioner  said,  embedded in  these  issues  are                                                               
highly  technical  questions  that   demand  data,  analysis  and                                                               
expertise to answer. It is too  early to say what changes will be                                                               
warranted in Alaska in these  areas, but the legislature would be                                                               
getting recommendations from all the state agencies                                                                             
                                                                                                                                
2:38:51 PM                                                                                                                    
CO-CHAIR WIELECHOWSKI asked his  position on using best available                                                               
technologies.                                                                                                                   
                                                                                                                                
COMMISSIONER HARTIG answered  that using BAT is  a requirement in                                                               
state  statute; they  are to  be  employed in  the c-plans.  Then                                                               
every five years  a conference is required where the  BATs can be                                                               
selected.  During  renewal of  c-plans  new  technologies can  be                                                               
recognized.  The  bottom  line  is  that  the  response  planning                                                               
standards have to be met.                                                                                                       
                                                                                                                                
They are  looking at having  future conferences in light  of some                                                               
of  the questions  that have  arisen in  the Gulf  including well                                                               
control, blow  out preventers, well safety  and regaining control                                                               
of  a well  if  there is  a  blow out.  Funding  could come  from                                                               
funding  requests or  industry.  They  are expecting  cooperation                                                               
with RCACs and the industry.                                                                                                    
                                                                                                                                
2:40:39 PM                                                                                                                    
CO-CHAIR  WIELECHOWSKI asked  what he  thought about  the use  of                                                               
unexpected drills that might need more funding.                                                                                 
                                                                                                                                
COMMISSIONER HARTIG replied  that there are pros  and cons. There                                                               
are safety concerns with any  drill in open water, and especially                                                               
large ones;  but he is a  great believer in them.  He turned that                                                               
answer over to Mr. Dietrick.                                                                                                    
                                                                                                                                
2:41:50 PM                                                                                                                    
LARRY  DIETRICK,  Director,  Division  of  Spill  Prevention  and                                                               
Response, Alaska Department  of Environmental Conservation (DEC),                                                               
said he was available for questions.  He said they all agree that                                                               
a robust  drill program  is a  key part  of verification  to make                                                               
sure  spill response  preparedness capability  is in  place. They                                                               
had two unannounced drills in the  last couple of months and more                                                               
than  that on  a fiscal  year  basis. That  is reported  annually                                                               
through the budget process.                                                                                                     
                                                                                                                                
The state has to look at  a large number of facilities statewide.                                                               
In deciding  who to  drill, they frequently  look at  the product                                                               
type and the  facilities that they store, transport  or produce -                                                               
persistent  products   get  first  attention.   Spill  histories,                                                               
inspection  results,  incidents  at  the  facility  all  go  into                                                               
"triaging" which  facilities are  picked for  a drill.  They also                                                               
try to target specific objectives and  then carry them out with a                                                               
full  field   deployment.  They   coordinate  with   the  federal                                                               
government  for maximum  efficiency; many  of the  facilities are                                                               
also required to have federal  c-plans and are subject to federal                                                               
drill requirements.                                                                                                             
                                                                                                                                
CO-CHAIR  MCGUIRE  asked  what   he  thought  about  the  blanket                                                               
requirement  that equipment  can't  be over  20  years and  older                                                               
unless  it has  been  tested and  specifically  certified by  the                                                               
state.                                                                                                                          
                                                                                                                                
MR. DIETRICK  answered that was  an interesting concept.  The BAT                                                               
requirement is in two parts; one  is for prevention and the other                                                               
part is  for response. The  BAT is  set by the  response planning                                                               
standards  which gives  the operators  some  flexibility to  pick                                                               
from approved  equipment. It doesn't  eliminate any  one operator                                                               
and has worked well.                                                                                                            
                                                                                                                                
With regard  to age,  the equipment is  tested during  the drills                                                               
and  inspection program  where  it gets  actually  tested in  the                                                               
water. If they  should test and recertify  20-year old equipment,                                                               
in the  skimmer world, for  instance, new products come  out, but                                                               
he  didn't  know  if  a   testing  program  would  enhance  their                                                               
capability. He would have to consider it.                                                                                       
                                                                                                                                
2:48:36 PM                                                                                                                    
CO-CHAIR  MCGUIRE said  there  was also  a  suggestion that  they                                                               
transfer  authority for  blow out  prevention  and well  response                                                               
plans from  DEC to AOGCC, given  that they have the  engineers on                                                               
staff and asked his response.                                                                                                   
                                                                                                                                
COMMISSIONER  HARTIG replied  they are  already looking  at that,                                                               
and are  in discussions with  AOGCC and  the Division of  Oil and                                                               
Gas. Regulations already require  exploratory and production well                                                               
c-plans  to have  a well  control  plan where  they would  regain                                                               
control of  the within 15 days  after losing control (a  blow out                                                               
situation). It is  true they don't have the  same expertise AOGCC                                                               
has  and would  turn  to them  anyway for  advice.  They are  not                                                               
trying  to protect  turf,  but he  wants to  make  sure that  the                                                               
issues go  to the  experts one way  or the other  to get  it done                                                               
right.                                                                                                                          
                                                                                                                                
2:50:33 PM                                                                                                                    
CO-CHAIR MCGUIRE  asked with respect  to "the smaller  guys" like                                                               
Pioneer,  to what  end is  DEC looking  at assessing  the federal                                                               
recommendations,  and various  financial positions  and locations                                                               
for  drilling  operations  of   these  different  companies.  She                                                               
doesn't want  to end up  putting smaller explorers  and operators                                                               
out of business.                                                                                                                
                                                                                                                                
COMMISSIONER HARTIG  replied that  the economics of  a particular                                                               
project and what a company can  afford are not part of the c-plan                                                               
approval  process;  rather they  look  at  the realistic  maximum                                                               
discharge  scenario. But  there is  a way  to make  the economics                                                               
better, which what the companies  have done; they have formed co-                                                               
ops where they can share equipment.                                                                                             
                                                                                                                                
2:52:32 PM                                                                                                                    
DAN SEAMOUNT, Geologic  Commissioner and Chair of  the Alaska Oil                                                               
and  Gas  Conservation  Commission (AOGCC),  said  the  committee                                                               
asked  them  two questions  and  their  "AOGCC Statement  to  the                                                               
Governor"  and the  Compass piece  they sent  into the  Anchorage                                                               
Daily News  regarding blow out  prevention goes to  question one.                                                               
Question two is if they can  do other things to mitigate the risk                                                               
of a blow out even more; handout number three addresses that.                                                                   
                                                                                                                                
He  stated  that  a  previous  presenter said  the  state  has  a                                                               
conflict  in that  it  oversees the  regulators  and the  revenue                                                               
generators with  the state, but  that's not the case  with AOGCC.                                                               
They used to be under  the Department of Natural Resources (DNR),                                                               
but were split  away from them in 1977 when  someone actually did                                                               
perceive  that conflict.  They are  a totally  independent agency                                                               
and report to the legislature and the people of Alaska.                                                                         
                                                                                                                                
First  question:   How  would  you  assess   Alaska's  oil  spill                                                             
preparedness and its capability to respond to oil spills?                                                                       
                                                                                                                                
MR. SEAMOUNT  said he would speak  to issues that only  AGOCC has                                                               
authority  over.  They  don't  have   authority  over  oil  spill                                                               
cleanup,  but they  do have  oversight over  well operations  and                                                               
relief well drilling in order to control the blow out.                                                                          
                                                                                                                                
They  have very  important authority  over oil  spill prevention,                                                               
which should  be heavily emphasized. Prevention  makes a response                                                               
unnecessary.  They  maintain   a  technically  comprehensive  and                                                               
codified  well permitting  process  and  a rigorous,  interactive                                                               
well  operations  inspection  program administered  by  a  highly                                                               
experienced and professional staff.                                                                                             
                                                                                                                                
 All Alaska  oil and  gas (and  soon, geothermal)  wells must  be                                                               
permitted  by  the  AOGCC. All  drilling  and  completion  permit                                                               
applications  are thoroughly  reviewed by  competent, experienced                                                               
geologists  and state-licensed  petroleum engineers.  Among other                                                               
things, the  staff insures that  the well plan  includes adequate                                                               
mud weights  (first line  of defense),  proper casing  and cement                                                               
design (second  line of defense),  and properly working  blow out                                                               
preventers (third  line of defense). They  oversee other elements                                                               
of well integrity after the well is drilled and completed.                                                                      
                                                                                                                                
If an application  fails to meet all of  AOGCC regulations, fails                                                               
to  be compliant  or in  any other  way satisfy  good engineering                                                               
practices the  well operator  is required  to make  the necessary                                                               
changes or the application gets denied.                                                                                         
                                                                                                                                
A robust  AOGCC field well inspection  program follows permitting                                                               
to  ensure  regulatory and  permit  compliance.  AOGCC employs  5                                                               
Petroleum  Inspectors  with  an  average 30  years  oil  and  gas                                                               
experience  (private industry  and AOGCC)  per inspector,  tasked                                                               
with  witnessing   critical  tests  of  equipment   used  in  the                                                               
drilling,  production and  measurement of  hydrocarbons, and  the                                                               
proper abandonment of wells.                                                                                                    
                                                                                                                                
He explained that AOGCC  performs periodic compliance inspections                                                               
to  ensure  the  equipment  being used  is  consistent  with  the                                                               
approved  application, provides  redundant levels  of safety  and                                                               
protection  for  the  well operations  being  performed,  and  is                                                               
suitable  for  the  environment in  which  activities  are  being                                                               
conducted.                                                                                                                      
                                                                                                                                
Blowout  prevention equipment  inspections  and witnessing  tests                                                               
per the regulatory  frequency is a particular  emphasis for AOGCC                                                               
inspections. The  AOGCC requires  that BOPE must  be tested  at a                                                               
frequency no  greater than  every 14  days for  development wells                                                               
and every  7 days for  exploration wells and well  work-overs. In                                                               
essence, every active rig in Alaska  is inspected by the AOGCC at                                                               
least once  every 60  days. All  blowout prevention  test results                                                               
must be  provided to  the AOGCC  for review  and records  must be                                                               
maintained  by the  operator to  substantiate the  tests. If  any                                                               
major component  on the  BOPE fails  a test,  drilling operations                                                               
are suspended until it passes.                                                                                                  
                                                                                                                                
2:59:23 PM                                                                                                                    
MR. SEAMOUNT said since Prudhoe  Bay Field was discovered in 1968                                                               
there have  been seven  blowouts from the  5000 wells  drilled on                                                               
the North  Slope. The last one  was in 1994. All  except one were                                                               
the result  of loss  of control within  shallow gas  zones. Since                                                               
1962, there have  been four offshore blowouts in  Cook Inlet, the                                                               
last  in 1987.  All  were from  loss of  control  in shallow  gas                                                               
zones. None  of the blowouts  on the  North Slope and  Cook Inlet                                                               
has  resulted in  injuries  or  oil spills.  Since  then, due  to                                                               
improvement   and   seismic  acquisition,   geologic   knowledge,                                                               
improved   drilling    technology   and    increased   regulatory                                                               
requirements,  the  risk of  blowouts  from  shall gas  has  been                                                               
greatly reduced.                                                                                                                
                                                                                                                                
He  explained that  after  a well  is  completed, AOGCC  requires                                                               
installation, use  and maintenance  of safety valve  systems that                                                               
do for  a producing  well what  a blow out  preventer does  for a                                                               
drilling well -  if there is a  release it will shut  the well in                                                               
immediately.  They inspect  and require  testing of  safety valve                                                               
systems, and  he didn't know of  a failed safety valve  system in                                                               
Alaska that has resulted in a loss of well control.                                                                             
                                                                                                                                
MR.  SEAMOUNT said  that they  also require  that wells  maintain                                                               
mechanical integrity  over their  operating life. If  an operator                                                               
can't demonstrate  this to  their inspectors,  he is  required to                                                               
shut in  the well and insure  the well is safe  until the problem                                                               
is fixed.                                                                                                                       
                                                                                                                                
3:01:32 PM                                                                                                                    
ENFORCEMENT  ACTIONS: Failure  to comply  with AOGCC  regulations                                                               
results  in one  or more  of the  following enforcement  actions:                                                               
increased  testing and  oversight; restricted  operations; notice                                                               
of  violation  (with  timeframe for  corrective  actions);  civil                                                               
penalty;  or  criminal  penalty. All  deficiencies  found  during                                                               
AOGCC  inspections  or  reviews   of  operator  reports  must  be                                                               
corrected.  He said  enforcement actions  are available  on their                                                               
website and are accessible by the public.                                                                                       
                                                                                                                                
He  said   they  continuously  work  to   keep  their  regulatory                                                               
oversight current,  recently revising  their blow  out prevention                                                               
equipment,  well   safety  valve   system,  and   suspended  well                                                               
regulations.  Ultimately, though,  as evidenced  by their  strong                                                               
regulations,  they believe  prevention is  the key  to protecting                                                               
the people,  environment and  natural resources  of the  state of                                                               
Alaska.                                                                                                                         
                                                                                                                                
3:03:05 PM                                                                                                                    
Second  Question: What  changes if  any would  you make  to state                                                             
laws   regulations,  procedures   or  budgets   to  improve   our                                                               
preparedness and response capability?                                                                                           
                                                                                                                                
MR. SEAMOUNT said  they have been working on  the regulations and                                                               
making  them tighter,  but they  have also  provided a  notice of                                                               
inquiry and possible changes (handout 3) in AOGCC Docket OTH-10-                                                                
16, evaluating if  changes or additions are  needed to commission                                                               
regulations  governing  well  control   in  offshore  and  ultra-                                                               
extended reach wells. He said  they would hold meetings within 30                                                               
days  after the  public report  of investigation  results by  the                                                               
National  Committee   on  BP's  Deepwater  Horizon   oil  spilled                                                               
offshore  drilling.  They will  discuss  the  14 things  on  that                                                               
notice. He said the public was invited.                                                                                         
                                                                                                                                
CATHY FOERSTER,  Engineering Commissioner,  AOGCC, said he  did a                                                               
good job.                                                                                                                       
                                                                                                                                
CO-CHAIR WIELECHOWSKI thanked them for testifying.                                                                              
                                                                                                                                
3:05:07 PM                                                                                                                    
CO-CHAIR MCGUIRE  said they look  forward to hearing  the results                                                               
of talks.                                                                                                                       
                                                                                                                                
3:05:48 PM                                                                                                                    
KEVIN BANKS,  Director, Division  of Oil  and gas,  Department of                                                               
Natural  Resources (DNR),  highlighted a  few points.  Obviously,                                                               
OCS  development is  going to  be exceedingly  important for  our                                                               
future  as well  as  being  a key  part  of  our nation's  energy                                                               
endowment. He  hoped the state  can demonstrate it can  take care                                                               
of its own  business and can establish some  confidence among all                                                               
the states that we can take care of our offshore development.                                                                   
                                                                                                                                
He said  a Northern Economics  and ICER study indicates  there is                                                               
130 tcf  of undiscovered recoverable  natural gas in the  OCS, 27                                                               
bb/oil in  OCS that could add  35,000 jobs to the  Alaska economy                                                               
with payrolls  of $27 billion  over that  period. It will  add to                                                               
longevity to the North Slope  facilities and TAPS. By having that                                                               
equipment up  and running  more of  our own  state lands  will be                                                               
developed.                                                                                                                      
                                                                                                                                
Alaska  has  long-standing  experience in  offshore  development.                                                               
Endicott  was started  up in  1987 and  has produced  490 barrels                                                               
from two artificial  drilling islands, the North  Star project is                                                               
in its  9th year  and has  produced about 140  mm barrels  of oil                                                               
which  exceeds  their  mean  estimate, Oooguruk  is  now  up  and                                                               
Nakiachuk will start soon, both  of which have artificial islands                                                               
components.                                                                                                                     
                                                                                                                                
3:08:21 PM                                                                                                                    
He said obviously  these are shallower waters, and  not only does                                                               
that give  us better access to  the sea floor, but  it also means                                                               
that we are  using different kinds of equipment than  in the Gulf                                                               
of  Mexico. In  some of  the most  shallow, gravity-based  bottom                                                               
founded  structures can  be used  like ice  or grave  islands for                                                               
temporary drilling and exploration.                                                                                             
                                                                                                                                
MR.  BANKS  said our  reservoirs  don't  have  the same  kind  of                                                               
pressure because of  the depth and deposition  is much different,                                                               
and we already  have a handle on the drilling  environment. So we                                                               
know what to expect when  it comes time to establish requirements                                                               
for blow out prevention in the OCS.                                                                                             
                                                                                                                                
3:09:54 PM                                                                                                                    
What changes  will administration recommend?  Commissioner Hartig                                                               
already  talked  about  a   dialogue  within  the  administration                                                               
regarding the role  of AOGCC in broader  responsibilities for oil                                                               
spill prevention.  That was conducted  in part under  an offshore                                                               
oversight  team  that the  governor  established  earlier in  the                                                               
summer.  Their  work  continues and  involves  members  of  state                                                               
agencies  involved in  oil and  gas  development, including  DEC,                                                               
AOGCC  and  the DNR.  Recommendations  will  be forthcoming.  The                                                               
Petroleum  Systems  Integrity  Office   has  undertaken  the  GAP                                                               
analysis,  and  when that  is  completed  it will  generate  much                                                               
further discussion on changes.                                                                                                  
                                                                                                                                
MR. BANKS pointed  out that as serious an event  as the Deepwater                                                               
Horizon was something  of a rare event. So,  they should remember                                                               
to make  reasonable changes  that are  efficient and  work rather                                                               
than being a  reaction to an event this highly  unlikely to occur                                                               
here.                                                                                                                           
                                                                                                                                
3:12:29 PM                                                                                                                    
Also,  he   said  the  Petroleum  Systems   Integrity  Office  is                                                               
completing  program development  stage  for  a performance  based                                                               
management  system assessment  program,  a program  in which  the                                                               
core of the PSIOs' activities will  be to examine and oversee the                                                               
kinds of qualify management program  that the industry itself has                                                               
put  into  place to  regulate  itself.  This  is in  keeping  the                                                               
requirements of  AO 234. They  intend to coordinate  that program                                                               
with the industry and the administration.                                                                                       
                                                                                                                                
3:14:03 PM                                                                                                                    
CO-CHAIR WIELECHOWSKI  thanked everyone  for coming.  Staff would                                                               
put recommendations together so people  will have an idea of what                                                               
happened  at the  hearing. He  invited members  of the  public to                                                               
submit comments.                                                                                                                
                                                                                                                                
CO-CHAIR MCGUIRE thanked everyone, too.                                                                                         
                                                                                                                                
CO-CHAIR WIELECHOWSKI adjourned the meeting at 3:15.                                                                            
                                                                                                                                

Document Name Date/Time Subjects
AOGCC Compass.pdf SRES 9/21/2010 10:00:00 AM
AOGCC Inquiry Docket #OTH-10-16 (2).pdf SRES 9/21/2010 10:00:00 AM
AOGCC Statement to Gov.pdf SRES 9/21/2010 10:00:00 AM
DEC Response Fund Overview - February 11 2010 (2).pdf SRES 9/21/2010 10:00:00 AM
Jeff Short Senate ResourcesTestimony 21 Sept 2010.pdf SRES 9/21/2010 10:00:00 AM
DEC - Senate Resources Hrng 09-21-10.pdf SRES 9/21/2010 10:00:00 AM
(Show Format) NSB PowerPoint 9-21-10.ppsx SRES 9/21/2010 10:00:00 AM
ConocoPhillips Oil Spill Testimony_9.21.10- (FINAL-For Event).ppt SRES 9/21/2010 10:00:00 AM
Crockett Presentation to S Resources 09 21 10.ppt SRES 9/21/2010 10:00:00 AM
Shell Senate Resource Cttee Hearing final.pptx SRES 9/21/2010 10:00:00 AM