HOUSE SPECIAL COMMITTEE ON OIL AND GAS January 11, 2000 10:10 a.m. COMMITTEE CALENDAR ORGANIZATIONAL MEETING TAPE 00-1, SIDE A CALL TO ORDER Representative Whitaker, Chairman, convened the House Special Committee on Oil and Gas meeting at 10:10 a.m. PRESENT Members present at the call to order were Representatives Whitaker, Dyson, Phillips, Green, Harris, Kemplen, Brice and Smalley. Representatives arrived as the meeting was in progress. SUMMARY OF INFORMATION CHAIRMAN WHITAKER announced that the purpose of the meeting was to articulate the committee's agenda and goals for the session. REPRESENTATIVE PHILLIPS introduced Scott Petsel, her new aide, who also is a geologist. CHAIRMAN WHITAKER introduced committee staff. CHAIRMAN WHITAKER summarized the committee's general business as being to hear bills and resolutions assigned to it. Further, he said, it is the committee's responsibility to discern and understand issues related to oil and gas in Alaska. He mentioned two specific issues of concern to him: commercialization of North Slope gas and North Slope market dynamics. Chairman Whitaker then invited committee members to add to the list. REPRESENTATIVE DYSON added the issue of how Alaska crude oil competes in the world market. He later mentioned that the Pacific Northwest Economic Region (PNWER) provides a good forum for discussion of regional concerns. He recommended that BP Exploration (Alaska) Inc. provide a summary of heavy oil production. Representative Dyson said world security now is strange and dangerous. He suggested that it would be in the national interest to identify unknown oil reserves in Alaska, perhaps doing test drilling from the national defense perspective. He also asked if it was in this committee's purview to look into problems the Alaska Railroad Corporation has had in transporting oil, and suggested a joint meeting with the House Transportation Standing Committee concerning those problems. REPRESENTATIVE KEMPLEN recommended sending a letter to the House Transportation Standing Committee inviting them to a joint meeting. CHAIRMAN WHITAKER continued, adding to the list of committee concerns an understanding of Alaska's so-called Shallow Gas Act. He requested a status report on lease sales on the North Slope, and suggested that agency staff might come in and report. He also suggested reviewing the state's regulatory regime regarding oil and gas. CHAIRMAN WHITAKER emphasized that the committee needs to understand the implications of the proposed merger of British Petroleum with ARCO Alaska, Inc., but would not be debating the merger issue per se. He noted that his position is that the merger would erode the free enterprise system, but that the Administration has made a decision, and now it is up to the committee to consider positive and nonpolitical steps the legislature can take. REPRESENTATIVE PHILLIPS suggested a joint meeting with Canadian interests regarding the Canadian connection to North Slope gas. REPRESENTATIVE GREEN said Canada's Renaissance Oil Company, based in Alberta, is interested in Alaska, and he advocated participation in this state by independent oil companies. REPRESENTATIVE KEMPLEN suggested inviting Anadarko Petroleum Corporation to make a presentation on how they see that company fitting into plans for the state. He also recommended looking into fuel cells and other alternative fuels that may, in the future, affect demand for Alaskan oil and gas. In addition, he requested an update on the status of energy reserves in Southcentral Alaska. REPRESENTATIVE SMALLEY recommended looking into value-added processing. REPRESENTATIVE HARRIS suggested considering the implications of the proposed BP/ARCO merger with reference to its impact on jobs in the state. He also expressed concern about the new Valdez vessel tax on tankers, which he said could have a serious effect on the price of Alaska oil on the world market. COMMITTEE ACTION The committee took no action. ADJOURNMENT CHAIRMAN WHITAKER announced the committee would not adjourn, but was recessing until 10 a.m. on Thursday, January 13, 2000. NOTE: The meeting was recorded and handwritten log notes were taken. A copy of the tape and log notes may be obtained by contacting the House Records Office at Room 229, Terry Miller Legislative Office Building, 129 Sixth Street, Juneau, Alaska 99801-1182, (907) 465-2214, and after adjournment of the second session of the Twenty-first Alaska State Legislature, in the Legislative Reference Library.