HOUSE BILL NO. 129 "An Act relating to approval for oil and gas or gas only exploration and development in a geographical area; and providing for an effective date." Commissioner Sullivan provided a PowerPoint presentation: "HB 129: Oil and Gas Exploration and Development Approval by Geographical Area." Commissioner Sullivan continued to discuss a development plan. He noted that it was important to remember that the public interest phase would occur after // findings related to oil and gas leasing. He noted that there was an extensive vetting phase. There was much opportunity for meaningful public input. He stressed that certainty was important to the public process. He pointed to DNR statutes and relayed that there was a good argument that the department currently had the authority; however, it needed to be clarified. The bill would avoid an internal debate on the issue; the department did not want to invite litigation. 10:03:30 AM Co-Chair Austerman noted that the bill would be heard and held at approximately 10:25 a.m. WENDY WOOLF, PETROLEUM LAND MANAGER, DIVISION OF OIL/GAS, DEPARTMENT OF NATURAL RESOURCES, looked to slide 2 titled "Area wide Oil and Gas Lease Sales." She discussed lease sale areas. She moved to slide 3 and explained that the bill would clarify a statutory requirement related to leasing phases. Subsequent to the initial leasing phase, there would be a definition related to how oil and gas development would occur. Ms. Woolf explained slide 4: "Oil and Gas Lease Sale Process." She discussed what HB 129 did, how it benefitted the public, and how it benefitted the industry. -It clarifies the Department of Natural Resources can authorize oil and gas exploration and development activities within a geographical area. -It preserves public notice and review at the beginning of an exploration or development phase. -It ensures certainty when an approval has been granted for exploration or development activities. -It allows the public to comprehensively evaluate oil and gas activities within a geographical area. -It provides an opportunity for input at the beginning of an exploration or development phase. -It safeguards environmental concerns through special stipulations and conditions. -It allows a project to be planned within approved parameters and conditions. -It provides certainty that plans of operations meeting those defined criteria can proceed. -It ensures predictable project approvals for subsequent exploration or development activity. Ms. Woolf discussed slide 5: "Oil and Gas Lease Sale Process." Proposed Area wide Oil and Gas Lease Sale -Public Notice and Opportunity to Comment -Evaluate Statutory Criteria -Develop Mitigation Measures Final Finding of the Director to Lease Oil and Gas Exploration Phase Public Notice and Opportunity to Comment Development Phase Public Notice and Opportunity to Comment Transportation (Pipelines) Public Notice and Opportunity to Comment 10:09:32 AM Ms. Woolf discussed slide 6: "Life of an Oil and Gas Lease." Year 0 -Final Finding of the Director - Area wide Oil and Gas Lease Sale -Lease Issued (10-Year Term) Year 3 -Lease Plan of Operations - Seismic Program (multiple leases) -Public Notice and Comment Period Year 5 -Lease Plan of Operations - Exploration Well -Public Notice and Comment Period Year 6 -Lease Plan of Operations - Exploration Well -Public Notice and Comment Period Year 7 -Lease Plan of Development - Conceptual - Development Plan Year 8 -Lease Plan of Operations - Initial Development - Plans -Public Notice and Comment Period -Lease Plan of Operations - Modified Development Plans -Public Notice and Comment Period -Pipeline Application (AS 38.05.850 or AS 38.35) -Public Notice and Comment Period Year 10 -Production -Lease Plan of Operations - Additional Development Plans =Public Notice and Comment Period Ms. Woolf discussed slide 7: Example of Geographical Areas for Exploration Activities." The activities in the core of the North Slope would define the exploration activities. She separated out the shale from the conventional area. Ms. Woolf discussed slide8: "Example Geographical Areas for Development Activities." She spoke about the development activities formed by the geography. She remarked that the areas reflected looked at the core of the legislative activities. She stated that the public notice and opportunity for comment were important aspects of the legislation. 10:15:57 AM Ms. Woolf detailed slide 9:"Life of an Oil and Gas Lease under HB 129." Year 0 -Final Finding of the Director - Area wide Oil and Gas Lease Angela Salerno, Executive Director, National Association of Social Workers Alaska Chapter Lease Issued (10 - Year Term) Lessee develops exploration plans Year 3 -Lease Plan of Operations - Seismic Program (multiple leases) Year 5 -Lease Plan of Operations - Exploration Well Year 6 -Lease Plan of Operations - Exploration Well Discovery - Lessee formulates development plan Year 7 -Lease Plan of Development - Conceptual Development Plan Year 8 -Lease Plan of Operations - Initial Development Plans -Public Notice and Comment Period -Lease Plan of Operations - Modified Development Plans -Public Notice and Comment Period -Pipeline Application (AS 38.05.850 or AS 38.35) -Public Notice and Comment Period Year 10 -Production -Lease Plan of Operations - Additional Development Plans Ms. Woolf discussed slide 10: "Results." HB 129 provides for a new comprehensive review before exploration or development. HB 129 preserves public participation in the process. HB 129 allows stipulations to be approved before a company develops site specific plans for exploration or development activities. 10:20:52 AM JOE BALASH, DEPUTY COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES, discussed the new fiscal note. Co-Chair Austerman wondered if the financing would be a deposit. Mr. Balash stated that the bill would make permitting much more streamlined. He remarked that there would be more activity from additional lessees, so as the workload becomes greater, the department needed to be much more efficient. Commissioner Sullivan referred to the shale oil development which turned around North Dakota and Texas. Co-Chair Austerman requested a better definition of a geographical area to encompass shale oil development. Vice-Chair Neuman remarked upstream cost of expediting the permitting process. He felt that a fiscal note of $134 thousand would lead to a net gain for the state. HB 129 was HEARD and HELD in committee for further consideration.