Legislature(2013 - 2014)BUTROVICH 205
01/18/2013 03:30 PM Senate RESOURCES
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| Overview: Department of Natural Resources | |
| Adjourn |
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ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
January 18, 2013
3:30 p.m.
MEMBERS PRESENT
Senator Cathy Giessel, Chair
Senator Fred Dyson, Vice Chair
Senator Peter Micciche
Senator Click Bishop
Senator Anna Fairclough
MEMBERS ABSENT
Senator Lesil McGuire
Senator Hollis French
OTHER LEGISLATORS PRESENT
Senator Charlie Huggins
COMMITTEE CALENDAR
OVERVIEW: DEPARTMENT OF NATURAL RESOURCES
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
DAN SULLIVAN, Commissioner
Department of Natural Resources (DNR)
Anchorage, AK
POSITION STATEMENT: Delivered an overview of DNR.
JOE BALASH, Deputy Commissioner
Office of the Commissioner
Department of Natural Resources (DNR)
Anchorage, AK
POSITION STATEMENT: Participated in the overview of DNR.
ACTION NARRATIVE
3:30:02 PM
CHAIR CATHY GIESSEL called the Senate Resources Standing
Committee meeting to order at 3:30 p.m. Present at the call to
order were Senators Fairclough, Micciche, Dyson, Bishop and
Chair Giessel. Senators French and McGuire were excused.
^OVERVIEW: DEPARTMENT OF NATURAL RESOURCES
OVERVIEW: DEPARTMENT OF NATURAL RESOURCES
CHAIR CATHY GIESSEL, Alaska State Legislature, stated that the
business before the committee would be to hear an overview of
the Department of Natural Resources by Commissioner Dan Sullivan
and Deputy Commissioner Joe Balash.
3:31:45 PM
DAN SULLIVAN, Commissioner, Department of Natural Resources
(DNR), stated that the goal today was to provide a review of the
accomplishments in 2012 and key issues regarding the legislative
session. He said one of the messages was that there is a sense
of optimism that the state has the resource wealth to meet the
challenges ahead.
3:35:50 PM
COMMISSIONER SULLIVAN reported that in 2012 DNR promoted
interest in the state's resources both nationally and
internationally. He acknowledged that he enjoyed pointing out
that Alaska's land base was more than twice the size of Texas.
Also of interest is that the federal government owns more than
200 million acres in Alaska; Native Corporations own 44 million
acres; and the state has about 100 million acres of uplands, 60
million acres of tidelands, shore lands, and submerged lands,
and 40,000 miles of coastline.
He displayed estimates of North Slope and Cook Inlet
conventional oil and gas reserves, and deferred to the DNR
geologists and reservoir engineers to brief the committee in
more detail. The current estimates indicate that the state has
conventional resources that will last for decades, which will
certainly affect policy. He offered to follow up with more
detail on a very positive methane hydrate testing on the North
Slope. He highlighted the statement that, "Compared to most
basins, Alaska is relatively underexplored, with 500 exploration
wells on the North Slope, compared to Wyoming's 19,000." Texas,
by comparison, has about 250,000 exploration wells.
COMMISSIONER SULLIVAN said Alaska was also a mineral storehouse.
If it were a country, it would rank in the top ten in the world
for certain critical minerals including coal, copper, lead,
gold, zinc, and silver.
COMMISSIONER SULLIVAN reviewed the key 2012 accomplishments of
the divisions within DNR. The Division of Agriculture (DoA)
advocated statewide for the "Alaska Grown" program. The Division
of Forestry (DoF) looked forward to briefing the committee on
the Governor's Timber Jobs Taskforce activities. The Division of
Geological & Geophysical Surveys (DGGS) was the state equivalent
of the U.S. Geological Survey and probably the best in the
nation. A key accomplishments was the ongoing strategic and
critical minerals assessment program.
CHAIR GIESSEL noted that the legislature appropriated funds to
build a more appropriate Geologic Materials Center, and asked
how the project was progressing.
COMMISSIONER SULLIVAN deferred to Mr. Balash.
3:42:34 PM
JOE BALASH, Deputy Commissioner, Office of the Commissioner,
Department of Natural Resources (DNR), informed the committee
that the retrofitted Eagle River facility was well beyond
capacity and the stored materials were potentially degrading. He
said that the appropriated funds were used to identify current
and future needs, and DNR located a potential facility in East
Anchorage before the Governor's budget was released in December.
He noted that there was a $15 million item in the Department of
Administration (DOA) budget for purchase of that facility, and
he was promoting that agency's budget request. He offered to
provide the committee with specific details when there was a
purchase agreement in hand.
COMMISSIONER SULLIVAN described the current facility as the
"history of Alaska" and offered to give interested legislators a
tour. He noted that in 2012 the current Geologic Materials
Center hosted 507 visits from industry and academia. Many of
these industry representatives were looking with an eye toward
making investment decisions.
3:46:26 PM
SENATOR DYSON asked if he had a feel for the business case that
might make it profitable for a particular industry to use
natural gas liquids close to the production point.
MR. BALASH reminded the committee that the mmbtu quality of
Prudhoe Bay gas today was not what it once was, because for
years, the liquids had been captured and sent down TAPS and the
gas reinjected into the reservoir. The NGLs that remain part of
the production stream continue to be viewed as an essential
component of an anticipated massive LNG project. He suggested
the committee look at the topic further with the assistance of
the Division of Oil and Gas.
SENATOR DYSON asked Commissioner Sullivan to comment on the
significance of Alaska's rare earth minerals with regard to
international geo-politics.
COMMISSIONER SULLIVAN noted that the USGS indicated that Alaska
has over 70 occurrences of rare earth minerals, but that number
is likely higher. He offered to follow up with the DGGS minerals
assessment reports from the last two years. He explained that
the reports are released periodically to elicit interest from
industry and explorers. A recent Petroleum News article on the
topic had many promising results with regard to rare earth
minerals and gold, mostly in the Interior. He offered to provide
the article.
SENATOR DYSON asked if there was activity at Bokan Mountain.
COMMISSIONER SULLIVAN said yes.
3:50:38 PM
COMMISSIONER SULLIVAN continued to review the DNR divisions. He
said the Division of Mining, Land and Water was DNR's largest
division. A key accomplishment was to reduce the permit backlog
by 38 percent in the last 18 months. He described the Division
of Oil & Gas as a critical division that had a lot of activity
in 2012. He complimented Director Barron on the efforts
regarding leases and unit applications to get companies to drill
more. He informed the committee that the Division of Parks &
Outdoor Recreation was the largest in the country. Key
accomplishments in 2012 include two national honors for the
National Boating Safety Educator of the Year and the National
Partners in Conservation. He said the Division of Support
Services staff keeps things running efficiently.
COMMISSIONER SULLIVAN said the Gas Pipeline Project Office
monitors the efforts of the Alaska Pipeline Project (APP) with
regard to the 48-inch natural gas pipeline in order to
commercialize North Slope natural gas. It works closely with the
Alaska Gasline Development Corporation (AGDC). He deferred
discussion of key accomplishments until later in the
presentation.
COMMISSIONER SULLIVAN reminded the committee that the State
Pipeline Coordinator's Office had permitting authority over all
pipelines statewide. Key accomplishments include issuance of the
right-of-way lease for the Point Thomson Export Pipeline. He
relayed that the Office of Project Management & Permitting
coordinates the review of large-scale projects in the state.
That the office was very busy in 2012.
3:54:06 PM
COMMISSIONER SULLIVAN said the second part of the presentation
would be to highlight six areas: 1) Securing Alaska's future in
oil, 2) Commercializing North Slope Gas, 3) Comparative
advantages of Alaska LNG, 4) Secure Alaska's future with
strategic and critical minerals, 5) Permitting reform, and 6)
Sustainable development.
He said that with regard to the state's economic future, the
most critical issue was arresting the TAPS throughput decline.
To address this issue, the Governor announced an ambitious goal
of one million barrels of oil production per day [through TAPS
within 10 years.] He launched a four-part strategy in the first
quarter of 2011. The first was to increase production by making
Alaska more competitive. He emphasized that tax reform was the
cornerstone of the strategy. The second important part was to
ensure that the state, federal, and borough permitting processes
were structured and efficient. He reported that through the
permitting process in 2012, DNR had established a very strong
relationship with the North Slope Borough. The third part was to
facilitate and incentivize the next phases of North Slope
development. He highlighted that there was enormous opportunity
in both large and smaller fields, the Outer Continental Shelf
(OCS), and shale and other unconventional oil. The fourth part
of the strategy was to work with the Department of Commerce,
Community and Economic Development (DCCED) to promote Alaska's
resources and a positive investment climate to world markets. He
noted that the legislature appropriated money for this promotion
and it yielded positive results.
3:58:48 PM
COMMISSIONER SULLIVAN said that in 2011 and 2012 there were
strong lease sales in Cook Inlet, the North Slope and Beaufort
Sea. Part of that success was the result of DNR's efforts to
approach companies, explain the terms of lease sales, and
generally stimulate interest.
He displayed a map depicting the North Slope to illustrate the
recent and proposed activity for oil and gas. Some of the
highlights were that shale oil exploration was ongoing, Shell
Oil Company was able to drill exploratory wells in the Beaufort
Sea and Chukchi Sea, Point Thomson was settled, Linc Energy
drilling at Umiat was moving forward, and there were new
players, operators, and explorers. He highlighted the diversity
of conventional and unconventional players and, emphasized that
these developments just scratched the surface of the overall
potential. The focus is to increase competition, he said.
COMMISSIONER SULLIVAN reminded the committee that DNR on Monday
would testify on the challenges associated with Cook Inlet oil
and gas activity. He highlighted that in the past two years this
basin had undergone quite a renaissance in terms of exploration
and investment. Some of this renewed activity was the result of
DNR's focused efforts to attract new interest. DNR personally
showed the CEOs of some of these companies the Cook Inlet
resource basin and lease terms and encouraged their
participation.
He displayed a map showing the 2012 oil and gas activity in Cook
Inlet and highlighted an excerpt from a January 13, 2013
Petroleum News article. It said, "While dwindling supplies
remain a concern, the year (2012) saw companies large and small
making significant investments in the basin after years without
exploration and only limited development. If the most ambitious
companies were successful, the region would see increased oil
and gas volumes some 55 years after production began." An August
27, 2011 article in the Wall Street Journal said, "New energy
estimate breathes life into a declining Alaskan oil field."
4:02:43 PM
SENATOR GIESSEL recognized that Senator Huggins had arrived, and
invited him to join the committee.
COMMISSIONER SULLIVAN opened the discussion on commercializing
North Slope gas and noted that in early 2012 the major producers
were not working together, the Point Thomson development was not
moving, and nobody was talking about Alaska despite the rising
opportunities and activity in Asia. "We were not on the map in
the most dynamic, important market in the world," he said.
Nevertheless, the Governor laid out in the 2012 State of the
State speech some very important benchmarks for a roadmap to a
gas pipeline. He recognized that sometimes progress would be
incremental and despite some skepticism, those benchmarks were
met.
One of those benchmarks was the issue of alignment, because
ConocoPhillips, BP and ExxonMobil were not working together or
focused on an LNG project. At the Governor's behest, the three
CEOs met with the Governor and in late March issued a letter
stating that they had "aligned on a structured, stewardable and
transparent approach with the aim to commercialize North Slope
natural gas resources within an AGIA framework."
The Point Thomson settlement was another important benchmark
that DNR achieved at the end of March. Noting that Joe Balash
played a very critical role, he said this settlement was
strategic for three principle reasons. First, it opens the
eastern North Slope. Part of the initial development will be a
70,000 barrel per day common carrier liquids pipeline going into
TAPS. This opens opportunity for smaller explorers in the area
and is very important in terms of the TAPS throughput issue and
bringing infrastructure to that remote part of the state.
Secondly, the settlement is important from the perspective of
gas commercialization. Most of the ongoing multi-billion dollar
infrastructure development can be used for the gas reinjection
project. The issue of jobs is the third reason the settlement is
strategic. During the construction phase, the sustained jobs
estimate is between 600 and 800 in the state, peaking at over
2,000.
4:08:33 PM
COMMISSIONER SULLIVAN informed the committee that there has been
three phases of activity since the Point Thomson settlement. The
first phase was to explain and defend the settlement to the
legislature in general and the Resources Committees
specifically. He noted that one person filed a lawsuit, although
it did not appear to be progressing. DNR then focused on the
required state, federal, and borough permitting processes. The
third phase was getting to work building ice roads and other
infrastructure.
4:09:25 PM
SENATOR BISHOP complimented Commissioner Sullivan and his staff
on the settlement agreement and stated that he was pleased to
report that two prime Alaska contractors were working on the
project and had an over 90 percent Alaska-hire record. He asked
the record to reflect ExxonMobil's serious effort to purchase
goods and services in the state, and "that anything that can be
bought and manufactured in Alaska is being done."
COMMISSIONER SULLIVAN confirmed that the settlement had a strong
Alaska hire component, and that the former labor commissioner
and new legislator played a large part.
Continuing the presentation, he said that achieving the
Governor's benchmarks attracted huge national and international
press. The Financial Times on 3/30/2012 reported:
ExxonMobil, BP and ConocoPhillips have reached
agreement with the state of Alaska to take a
significant step forward on a $40bn-plus project to
export liquefied natural gas to Asia, resolving a
long-running lease dispute that had been holding up
progress.
In a joint letter, the chief executives of the three
companies said they were "aligned" on a plan to
develop the huge gas reserves of Alaska's North Slope,
which until now have been stranded without a route to
market.
Also on 3/30/12, the Wall Street Journal reported that the Point
Thomson settlement "paves the way for a pipeline project to ship
natural gas from the North Slope, unleashing the state's massive
gas reserves."
COMMISSIONER SULLIVAN stated that positive news reports
continued through the rest of 2012. He added that it was not a
"done deal," but there was progress and it was important that
Alaskans see what it was.
4:11:55 PM
SENATOR DYSON asked if he anticipated a scenario where the state
would receive federal credit for carbon sequestration if the CO
2
stripped out of Point Thomson gas was used to lift heavy oil.
COMMISSIONER SULLIVAN responded that the near-term focus and
goal was to finalize the concept selection on the project. He
acknowledged that the companies were looking at that sort of
"double positive," and suggested that the experts might be able
to provide specific details in a month or so.
4:14:22 PM
COMMISSIONER SULLIVAN said the Governor also spoke about
hardening the numbers by the third quarter, and on 10/1/2012
ExxonMobil, ConocoPhillips, BP, and TransCanada sent a letter
outlining their progress. In part, the letter stated:
We have narrowed the broad range of alternative
development concepts and assessed major project
components, including the gas pipeline, gas treatment
to remove CO and other impurities, natural gas
2
liquefaction, LNG storage, and marine terminal
facilities as described on Attachment 2. Individually,
each of these components would represent a world-class
project. Combined, they result in a mega-project of
unprecedented scale and challenge; up to 1.7 million
tons of steel, a peak construction workforce of up to
15,000, a permanent workforce of over 1,000 in Alaska,
and an estimated total cost in today's dollars of $45
to $65+ billion.
He said he particularly liked what the Globe and Mail reported
on 10/4/12. It said:
A massive new proposal to export natural gas from
Alaska brings a major competitor into the race to
carry North American gas to Asia, and adds pressure on
Canadian export projects to build quickly or risk
losing out...
It is notable for the stature of its backers - BP PLC,
Exxon Mobil Corp., ConocoPhillips Co. and TransCanada
Corp., which have now joined forces after dueling for
years over separate gas pipeline projects - and for
its scale.
COMMISSIONER SULLIVAN said the attachments were a very important
aspect of the letter to Governor Parnell. Attachment 1 shows the
integrated team of BP, ExxonMobil, ConocoPhillips, and
TransCanada. This multimillion dollar, four-company effort has
over 200 employees and contractors working on it. He said this
is an impressive team and the briefings thus far indicate that
the team is working together very well.
Attachment 2 provides the project concept description and
specifications for the liquefaction plant, storage and loading
facilities, producing fields, and pipeline. He noted that the
Governor requested these details and it gives Alaskans a sense
of the size and scope of the project. According to these
specifications, this LNG project would rank as one of the top
three in the world.
Attachment 3 shows the work plans and key decision points for
moving the project forward, and the hundreds of millions to
billions of dollars the companies will spend to reach each
decision point. The more money the companies spend, the more
likely it is that the project will go forward. He assured the
committee that DNR was making every effort to accelerate the
timeline and encouraged the members to send the same message
when they meet with these companies. He noted that the head of
ConocoPhillips in Alaska recently spoke of a potential sanction
decision as early as 2015, which is aggressive.
COMMISSIONER SULLIVAN reported that DNR also made very good,
complimentary progress with AGDC in 2012, focusing principally
on regulatory issues. He emphasized the importance of
complimentary progress in commercial upstream, technical
engineering, and regulatory permitting. Some paths are parallel,
but the activities are not duplicating, which is important.
SENATOR DYSON asked the commissioner to comment on the rumor
that some Asian utility coalitions had been in the state
evaluating the Alaska situation.
4:19:31 PM
COMMISSIONER SULLIVAN deferred comment until the next part of
the presentation.
SENATOR BISHOP asked if the current work was outside of AGIA and
therefore not reimbursable.
COMMISSIONER SULLIVAN explained that only midstream work
qualified for AGIA reimbursement, and that work was being done
by TransCanada/ExxonMobil - the Alaska Pipeline Project (APP)
team. ExxonMobil was the lead for the technical team, BP was the
lead for upstream work, and ConocoPhillips was doing the
downstream, liquefaction work.
Another reason for the progress last year was that the state
undertook a very aggressive marketing program to compare the
advantages of Alaska LNG to some of the highest level Chinese,
Korean, and Japanese government officials and utilities. He
described the effort as "flooding the zone in Asia" to create
"demand pull" among consumers. "They can help with regard to
accelerating the timeline and they can even help possibly with
financing and upstream investing," he said. Alaska is now "back
on the map" and viewed as a serious player in what is a fierce
global competition. In part, this is because of the dual effort
with both APP and AGDC.
COMMISSIONER SULLIVAN reiterated that the marketing program that
laid out the strong comparative advantages of Alaska LNG over
other competitors was starting to bear fruit.
4:23:19 PM
SENATOR MICCICHE mentioned federal legislation that focused on
blocking [unconventional gas] exports from the Lower 48, and
asked if DNR had been active with the Alaska congressional
delegation to ensure that Alaskan exports were secure for the
future.
COMMISSIONER SULLIVAN emphasized that he and his staff had
followed the debate very closely and had meetings with top-level
officials from the Department of Energy (DOE), the White House,
the National Security Council, and the Department of the
Interior. The basic message was that Alaska should not be
considered part of the debate regarding exports potentially
limiting gas supplies in the Lower 48. In Alaska, it would
actually have the opposite effect; a large export project would
increase volumes to Alaskans and decrease price. He mentioned
discussions with Senator Wyden and Congressman Markey and
reiterated that DNR had been very aggressive on the topic to
ensure that Alaska does not get caught up in any export limits.
4:26:53 PM
COMMISSIONER SULLIVAN reviewed some of the comparative
advantages of Alaska LNG that DNR had advertised to "hundreds if
not thousands of people in Asia" in the past year. He
highlighted the following:
· The North Slope of Alaska has a huge resource base and
there is essentially no resource risk.
· The route for a large-scale LNG project would be co-located
with existing oil and gas infrastructure, and would have
limited environmental impact.
· Alaska has a longstanding tradition of exceptional
reliability in exporting LNG to ASIA. ConocoPhillips has
never missed a shipment making it arguably the most
reliable supplier of gas to Asia.
· Alaska does not use gas supplies for political purposes.
· Alaska LNG has geographic proximity advantages, political
legal stability, and cost competitiveness.
· World-class businesses and LNG producers have already
invested billions on LNG studies and oil and gas
infrastructure in Alaska.
· The existing Alaska LNG export facility already has a U.S.
Department of Energy export license and state regulatory
approvals are in place to produce and transport gas.
· Alaska LNG presents less political risk; it is not part of
the Lower 48 shale debate and controversy.
· ANGSA resolved First Nation issues for Alaska that continue
to plague Western Canada and British Columbia projects.
· The Presidential Finding of January 12, 1988 set a strong
precedent that may still be applicable today. President
Ronald Reagan stated the following: "Accordingly, I find
that exports of Alaska natural gas in quantities in excess
of 1,000 Mcf per day will not diminish the total quantity
or quality nor increase the total price of energy available
to the United States."
· Alaska LNG has both downstream and upstream investment
opportunities.
· The Alaska project has comparative advantages over other
projects or regimes. For example, prospective buyers may
want to read Wall Street Journal articles from September
24, 2012 and December 6, 2012 before buying gas in
Australia.
4:31:00 PM
COMMISSIONER SULLIVAN reiterated that the advertising campaign
was beginning to show results. The CEO and LNG team of the Korea
Gas Corporation (KOGAS) was in Juneau for two days and received
a briefing on the comparative advantages of Alaska LNG. The
Alaska Gas Pipeline Project Office signed a cooperation
agreement with a Japanese consortium called Resources Energy
Inc. (REI). That entity is looking at a study regarding a large-
scale liquefaction facility. Mitsui and Mitsubishi Heavy
Industry, Ltd. have also reached out to DNR. In a briefing at
the U.S. Embassy, DNR met with the Japan Bank for International
Cooperation (JBIC). Alaska was also invited to Tokyo in
September to the largest consumer/producer LNG conference in the
world. Attendees included the energy ministers from Qatar,
Australia, Canada, and Russia and the government ministry heads
from Taiwan, Korea, Japan, China, and India. Alaska was invited
to have a speaking role. When the senior Japanese officials made
introductions, they highlighted the Emir and energy minister of
Qatar and thanked them for their help after the Fukushima
earthquake. The Alaska delegation was the only other delegation
that was introduced, and was recognized as Japan's longest, most
reliable LNG supplier. That is a good indication that Alaska is
back on the map and that is what the Governor was referring to
in the State of the State speech, he said.
COMMISSIONER SULLIVAN said the current focus is to align the
various stakeholders, because that increases the chance for
success. However, the Governor has also been working to
strengthen AGDC to ensure the ability to move forward if
alignment does not come together.
SENATOR BISHOP urged caution with regard to skyrocketing labor
costs and project labor agreements and noted the problems that
Australia was currently experiencing.
COMMISSIONER SULLIVAN confirmed that labor costs were having a
huge impact on Australian projects. Responding to a comment
about being competitive, he said it was time for Alaskans to
stop fighting over a pipeline and start fighting for a pipeline,
because the competition is fierce.
4:37:31 PM
COMMISSIONER SULLIVAN reported that in 2011 the Governor
launched a comprehensive five-part strategy to secure Alaska's
future with regard to strategic and critical minerals. It would
undertake a statewide assessment of the strategic mineral
potential; develop infrastructure partnerships and incentives;
improve the structure and efficiency of the permitting
processes; encourage partnerships and cooperation with the
federal government, local governments, Native corporations, and
potential new entrants; and attract new investment markets.
Alaska has seven producing mines at Red Dog, Greens Creek, Pogo,
Fort Knox, Usibelli, Nixon Fork, and Kensington. In 2011, the
gross mineral production value totaled $3.8 billion and the
export value was $1.8 billion. These mines are also job-
intensive. He estimated that Fort Knox employed 700-800
employees and highlighted that the average mining wage was
$100,000. He noted that in 2011 the mineral exploration
investment in Alaska totaled $365 million, which accounted for
about one-third of the total spent on exploration in the U.S. In
2011, 30 exploration projects spent more than $1 million,
another large summer job creator. [Advanced exploration projects
include Pebble, Bokan Mountain, Donlin, Money Knob, and
Niblack.]
SENATOR BISHOP reported that Barrick Gold in Nevada was
switching to gas for its surface fleet, which would reduce costs
by 60 percent. He mused about how doing that could help marginal
Alaska projects.
COMMISSIONER SULLIVAN highlighted that Donlin had started the
permitting stage and the current plan of development included a
gas pipeline from Cook Inlet to the project.
4:41:21 PM
COMMISSIONER SULLIVAN reminded the committee that the first
Alaska Strategic & Critical Minerals Summit took place in
Fairbanks in 2011 and the national and international turnout was
impressive. The 2012 summit focused on motivating "deal making"
and the featured speakers included state and federal officials
and a representative from the Japan Oil, Gas and Metals National
Corporation (JOGMEC).
COMMISSIONER SULLIVAN explained that when the Parnell
Administration took office, the permitting backlog totaled
2,500. DNR focused on eliminating the backlog, streamlining the
system, and making it timely. He noted that House Bill 361,
which passed with strong bipartisan support, made high priority
statutory changes related to leasing and disposal programs
intended to reduce permitting burdens. The Governor introduced
SB 26 today, which builds on those comprehensive reform efforts.
COMMISSIONER SULLIVAN emphasized Alaska's robust environmental
standards and strong record of developing its resources and
protecting the environment. The standards exceed most other
jurisdictions in the world and investors are required to abide
by them. He said Alaska also plays a strong role as an
innovator. Horizontal drilling with its limited impact of oil
development was, in many ways, pioneered in Alaska.
4:45:52 PM
COMMISSIONER SULLIVAN highlighted the Governor's tax reform bill
that has four core principles. Oil taxes must be fair to
Alaskans, encourage new production, restore balance to the
system, and be durable for the long term. He relayed that a
prediction by an energy security think-tank was that by 2020 the
U.S. would be the number-one producer of oil and gas in the
world. He said that Alaska has the geology to be the leader. He
agreed with the Governor's recent statement, that it was neither
acceptable nor fair to support the status quo without a plan.
He said some other positive efforts include the new benchmarks
the Governor set for gas commercialization, continued permitting
reform, and the continuing efforts to promote the state. He
mentioned the Mineral Exploration Roundup Conference, a speaking
part at the North American Prospect Expo, "Alaska Grown"
produce, Alaska State Parks hosting of "Arts in the Parks," and
a feature article on Alaska in the Oil & Gas Journal.
4:47:55 PM
COMMISSIONER SULLIVAN concluded that optimism was high but there
was a lot more work to do.
SENATOR DYSON asked Commissioner Sullivan to address three
things now or later. First, he asked about the potential in Cook
Inlet for producers not to push gas development. Second, he
asked at what rate gas could be taken from the North Slope
reservoir without sacrificing oil production. He noted that it
had been 15-20 years since the Alaska Oil and Gas Conservation
Commission (AOGCC) had looked at the North Slope reservoir gas
off-take rate. Finally, he asked if the state should start
looking at exporting coal to Pacific Rim markets. He said he
also looked forward to a response about gas liquids.
[The assumption was that Commissioner Sullivan would respond off
the record.]
4:50:59 PM
SENATOR MICCICHE expressed a desire to see an exercise to
quantify the enormous potential for additional large and small
industries and businesses to feed off the gas supply. He
acknowledged that it would be a challenge to quantify, but
imperative in justifying the existence of a pipeline moving
forward.
CHAIR GIESSEL thanked Commissioner Sullivan.
4:53:18 PM
There being nothing further to come before the committee, Chair
Giessel adjourned the Senate Resources Standing Committee
meeting at 4:53 pm.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SRES_DNR Update_1-18-13 REVISED 1-21-13.pdf |
SRES 1/18/2013 3:30:00 PM |