HJR 12 - LEASES IN NATL PETROLEUM RESERVE Number 166 CO-CHAIRMAN OGAN announced the first order of business was House Joint Resolution No. 12, urging the Secretary of the Interior to conduct competitive oil and gas lease sales within the National Petroleum Reserve in Alaska. He called on Representative Green to present HJR 12. Number 190 REPRESENTATIVE JOE GREEN, sponsor of HJR 12, referred to a map in the committee packet that showed the National Petroleum Reserve - Alaska (NPR-A) and the Arctic National Wildlife Refuge (ANWR). He said, "For familiarizing anybody who may not be aware, the Kuparuk River, Prudhoe Bay, Milne Point, all those units that have been so productive for so many years, and then on the west side of that blow-up is the Colville River delta, and it is the Colville River delta where the recent Alpine discovery that ARCO has been so instrumental in developing will take place. That main channel is the eastern boundary of the ... Alaska National Petroleum Reserve, and it is that area that we're ... trying to energize the federal government to resume leasing, when it's just a river-width away from known commercial production." REPRESENTATIVE GREEN explained that area was set aside in 1923 as a petroleum reserve. "By anybody's definition of that, that means something to be developed for petroleum," he said. Representative Green indicated he would outline the area's history and answer geographical or technical questions. A staff member would then present the legislation. Number 312 REPRESENTATIVE GREEN advised that then-President Warren G. Harding, by executive order in 1923, established Naval Petroleum Reserve No. 4, which contained approximately 37,000 square miles of land. Approximately the size of Indiana, it comprised about one-third of the North Slope. Representative Green said, "That later was changed, and so that no one gets confused, in 1976 became the National Petroleum Reserve of Alaska, and I'll get to that in a minute, but you may have heard either of those definitions, and we're ... talking about the same area." REPRESENTATIVE GREEN said as far back as the 1800s, trapping, whaling, hunting and bartering took place throughout coastal Alaska. After the Civil War, when Secretary Seward was instrumental in its purchase, Alaska became a U.S. territory. From roughly 1900 to 1920, several U.S. Geological Survey reports were done. In 1901, Frank C. Schrader and W.J. Peters did a geologic traverse in that area and in the Brooks Range; In 1903, Alfred Brooks, for whom the Brooks Range was named, did similar work. REPRESENTATIVE GREEN noted that oil seeps at Cape Simpson, not far from what he termed "the sensitive environmental area" of Teshekpuk Lake, were delineated and pictures taken in 1909. In addition, Ernest de K. Leffingwell, considered by some to be the "father of geology in Alaska," made a comprehensive geological report in 1919. REPRESENTATIVE GREEN explained that from 1923 to 1926, an active U.S. Geological Survey worked the rivers and mountain ranges, trying to delineate what was contained within the petroleum reserve. From 1926 to 1943, there was essentially no activity. It was considered too remote and too expensive to develop. "But the main thing was that during that period of time in the Lower 48, there were many, many, many oil discoveries throughout the Lower 48, and we ... really had more oil than we could use," he stated. Number 518 REPRESENTATIVE GREEN reported that in 1943, activity resumed for the next couple of years because of World War II. He referred to a handout in the committee packet, accompanied by a tabulation of wells by name and number. He noted that between 1945 and 1952, 45 shallow-core tests and 36 test wells were drilled in that area and said, "[D]uring that time, three oil provinces and three gas deposits were discovered, none of which were commercial. So then we were over the war, and it was again thought too far away, so in 1953 to '73, there was another period of inactivity." REPRESENTATIVE GREEN recalled the Arab embargo of 1973 and the long gas lines in the Lower 48. He said, "So between '74 and '82, there was another activity that ended up ultimately with Husky Oil Company's becoming the contractor. We drilled 21 more test wells over the next seven years, and again, ... [were] not able to come up with anything of a commercial nature. 1976, some of you may be aware of the Naval Reserves Production Act, which in effect changed the name of this to its current name. And it provided for oil sales from other naval petroleum reserves - Elk Hills was probably the most notable - that had production and was actually being sold commercially, then, rather than being kept for a naval reserve." Number 637 REPRESENTATIVE GREEN continued: "Unfortunately, in 1982 the program terminated and the operations were taken over by BLM; and that's where we stand right now. But in the GS studies, there were some 11 trillion cubic feet of natural gas and at least six billion barrels of oil estimated by the way they do their estimating for the federal government. Of that six billion barrels, three-fourths of it lie, by their estimate, within the eastern one-fourth of the NPR-A, which is the area of most interest to the State of Alaska, obviously." Number 687 REPRESENTATIVE GREEN continued: "Then, of course, there was development progressively moving ... from Prudhoe Bay to Kuparuk River to out into the delta, and unfortunately, the early development in the Colville delta was uneconomic as well. And only recently did ARCO find what has now become known as the `Alpine discovery,' and [they] do plan to go ahead and develop that commercially. There are environmental considerations being considered at the time. And the development area, certainly the subsurface is still proprietary, but the development area that they propose abuts the river and consequently abuts the NPR-A. And it's because of that, and the fact that it would certainly seem to me reasonable to develop this entire discovery, whatever it might be, if it does go over or if there are ancillary fields that are on the west side. The best place to find oil is near an oil field, and that seems reasonable." REPRESENTATIVE GREEN continued: "And there is a pre-existing agreement that says that any oil discovered and produced ... from NPR-A would be shared 50-50 with the State of Alaska and the federal government. And my final statement, other than answering questions, would be that I want to make perfectly clear that in no way does this have any effect, or diminish in any way, our emphasis on trying to get ANWR open. They are completely separate entities. It's just an additional thing that I think would be good for the State of Alaska." Representative Green turned the presentation over to Jeff Logan. Number 790 JEFFREY A. LOGAN, Legislative Assistant to Representative Joe Green, stated he had little to add. "I would only state what is stated in the resolution, that the resolution simply asks the Secretary of the Interior to re-establish oil and gas lease sales in the NPR-A," he said. "We believe the legislature should urge the Secretary [of the Interior] to do so, because it would be in the best interests of the state for three reasons. The economic activity associated with a leasing program and the potential exploration and development would benefit Alaskans. The potential oil that might be found in NPR-A would flow through the TAPS pipeline, and we all know how important it is to keep the pipeline open. And, as Representative Green stated, the state receives 50 percent of the revenues from all sales, rentals, bonuses and royalties." Number 854 REPRESENTATIVE RAMONA BARNES made a motion to move HJR 12 from the committee with individual recommendations. CO-CHAIRMAN OGAN noted that Representative Nicholia had joined the meeting. He asked if there was any discussion or objection to the motion. There being no objection, HJR 12 moved from the House Resources Standing Committee with individual recommendations. HJR 12 - LEASES IN NATL PETROLEUM RESERVE  Number 1481 CO-CHAIRMAN OGAN announced the next order of business was House Joint Resolution No. 12, urging the Secretary of the Interior to conduct competitive oil and gas lease sales within the National Petroleum Reserve in Alaska. Co-Chairman Ogan had inadvertently omitted taking public testimony on HJR 12 before it moved out of committee. He apologized to those who had signed up to testify and asked if there were suggestions. CO-CHAIRMAN HUDSON suggested that written testimony be elicited from those who wanted to testify. That testimony could then be transmitted with HJR 12 to the next committee of referral. CO-CHAIRMAN OGAN agreed. He again apologized and stated it had not been his intention. Co-Chairman Ogan turned the gavel back to Co- Chairman Hudson for the next order of business.