HOUSE RESOURCES STANDING COMMITTEE March 6, 1995 8:05 a.m. MEMBERS PRESENT Representative Joe Green, Co-Chairman Representative Scott Ogan, Vice Chairman Representative Alan Austerman Representative Ramona Barnes Representative Pete Kott Representative Irene Nicholia MEMBERS ABSENT Representative Bill Williams, Co-Chairman Representative John Davies Representative Eileen MacLean OTHER LEGISLATORS PRESENT Representative Pete Kelly COMMITTEE CALENDAR Overview on Coalbed Methane HB 170: "An Act relating to intensive management of identified big game prey populations." HEARD AND HELD HRES - 03/06/95 *HB 195: "An Act repealing the laws authorizing milk marketing orders and the milk advisory board." SCHEDULED BUT NOT HEARD *(first public hearing) WITNESS REGISTER TOM SMITH, Geologist Division of Oil and Gas Department of Natural Resources 3601 C. Street, Ste. 1380 Anchorage, AK 99503 Phone: 762-2547 POSITION STATEMENT: Gave an overview on coalbed methane DAVE JOHNSTON, Chairman Alaska Oil and Gas Conservation Commission 3001 Porcupine Drive Anchorage, AK 99501 Phone: 279-1433 POSITION STATEMENT: Made comments on coalbed methane DAVE LAPPI, Representative Lapp Resources 4900 Sportsman Drive Anchorage, AK 99502 Phone: 248-7188 POSITION STATEMENT: Made comments on coalbed methane PAUL CRAIG, President Z-Energy 2900 Boniface Parkway Anchorage, AK 99504 Phone: 563-5686 POSITION STATEMENT: Made comments on coalbed methane REPRESENTATIVE PETE KELLY Alaska State Legislature State Capitol, Room 513 Juneau, AK 99801 Phone: 465-2327 POSITION STATEMENT: Prime Sponsor HB 170 SANDRA ARNOLD, Representative Alaska Wildlife Alliance P.O. Box 202022 Anchorage, AK 99520 Phone: 277-0897 POSITION STATEMENT: Opposed HB 170 MICHAEL TETREAU P.O. Box 3046 Seward, AK 99664 Phone: 224-3175 POSITION STATEMENT: Opposed HB 170 JIM RAMSDELL P.O. Box 2004 Seward, AK 99664 Phone: 224-2301 POSITION STATEMENT: Opposed HB 170 MARK LUTTRELL, President Eastern Kenai Peninsula Environmental Action Association P.O. Box 571 Seward, AK 99664 Phone: 224-5372 POSITION STATEMENT: Opposed HB 170 OLIVER BURRIS 2801 Talkeetna Fairbanks, AK 99709 Phone: 474-0437 POSITION STATEMENT: Supported HB 170 SAM HARBO Professor Emeritus of Wildlife Management & Statistics P.O. Box 10201 Fairbanks, AK 99710 Phone: 457-7815 POSITION STATEMENT: Supported HB 170 ACTION NARRATIVE TAPE 95-28, SIDE A Number 000 The House Resources Committee was called to order by Co-Chairman Green at 8:05 a.m. Members present at the call to order were Representatives Green, Ogan, Austerman and Kott. Members absent were Representatives Williams, Barnes, Davies, MacLean, and Nicholia. REPRESENTATIVE JOE GREEN stated there would be a presentation on coalbed methane. He noted there had been a test well drilled near Wasilla last year. He announced the meeting is on teleconference in Anchorage, Fairbanks, and Seward. Number 040 CO-CHAIRMAN GREEN stated one of the questions he hoped would be answered during the presentation is what coalbed methane is. He wondered if coalbed methane is a mineral, oil or gas. He also questioned if coalbed methane is handled as a gas well or as a function from a mineral interest. TOM SMITH, GEOLOGIST, DIVISION OF OIL AND GAS, DEPARTMENT OF NATURAL RESOURCES (DNR), gave an overview using slides. He stated methane is a natural gas. He said as organic material is turned into coal by heat and pressure it gives off gas. First, the coal gives off biogenic or swamp gas. As the higher rank coals are reached, particularly the bituminous and anthracite ranks, the coal gives off thermogenic gas. He stressed higher rank coals will have more gas. MR. SMITH stated coalbeds are unique in that they are the source of the gas and the reservoir target. A coal stores high concentrations of methane due to the microporosity in the coal. He said to produce coalbed methane, there is a need to get the water out first, which is a big difference between conventional gas and coalbed gas. In the fractures in the coal, there are large volumes of water present. In order to get the gas to move, there is a need to lower the pressure on the coal by dewatering it. Then the gas will move out of the coal into the cleats or fractures toward the well bore. As water is gradually pumped out, gas production will increase. He noted that after seven or eight wells are drilled in a particular area, the wells do better because the pressure has been lowered in a large area of coal seams. MR. SMITH told committee members that coal gas or methane gas has long been a nuisance to miners. He said it was not until the 1970s that coalbed methane production was done before mining occurred, which led to the first commercial gas production in Alabama's Black Warrior Basin in 1980. He pointed out the methane resource is very new compared to conventional oil and gas. He stated another main producing basin in the lower 48 is the San Juan Basin in Colorado and New Mexico. He noted production of methane is in seven or eight coal basins in the lower 48 currently. Number 157 MR. SMITH stated in 1992, the San Juan Basin produced 436 billion cubic feet of gas from about 2,000 wells, which is approximately double the current Cook Inlet production. In the Black Warrior Basin, 92 billion cubic feet of gas was produced. He noted the coals in the Black Warrior Basin are much thinner. The San Juan Basin wells produced 400,000 to 1 million cubic feet a day which compares to the average well rate in Cook Inlet (from conventional gas) of about 6 million cubic feet and some of the North Slope wells producing 2 million cubic feet. He noted the methane resource will involve smaller wells, but not significantly smaller. MR. SMITH showed a slide which indicated how new the methane resource is. The productions curves showed that in the last five years, much has been learned. He also presented a slide showing what a typical well looks like. He said there is an up hole motor which drives a down hole pump which has two lines coming out--one for gas and one for water. He displayed several slides showing different wells and what is needed to get the well into production. He noted the coals have to be stimulated to get production which sometimes is more expensive than drilling the well. He showed an experimental field in Alabama. He said water will always be a problem with coalbed methane. In Alaska, discharging any water into the surface waters is not allowed. In Alabama, the water is treated, aerated and discharged into some of the larger rivers, with monitoring stations down stream. Number 225 MR. SMITH stated Alaska has a lot of coal--about one-half of the United States (U.S.) total reserves. He calculated Alaska's coal could contain a huge resource--1,000 trillion cubic feet of gas. He noted, however, perhaps only ten percent will be recoverable. He explained much of Alaska's coal is bituminous rank which is needed for coalbed methane production. He showed a slide indicating the locations of coal occurrences and basins in Alaska. MR. SMITH said when evaluating the coal basins, he looked at coal rank. He stated the coal has to be a certain rank to be productive. Some lower rank coals are productive but that is a rare occurrence. Ideally, the coal should be shallow--above 4,000 feet. A good reservoir extent and thickness is needed, just like a sandstone reservoir. He added that a simple structure is best. MR. SMITH said many of the areas in Alaska are less potential because they are subbituminous and lignite or lower rank coal. The North Slope and Cook Inlet are the big players in both the low rank and the high rank coals. He stated the North Slope is one of the biggest coal basins in the world. He pointed out the areas interested in coalbed methane production are the bituminous and high rank coals such as in the North Slope and the Cook Inlet. He noted the three large areas in the Interior also--the Kobuk, the upper and lower Koyukuk, and the Alaska Peninsula. He added these three basins have had little exploration and the resources are probably very rough. Number 286 MR. SMITH said the western North Slope, northern Cook Inlet, and the edges of Cook Inlet have high potential to provide world class reserves of coalbed methane. He stated areas for local production which would provide for village use would be the Alaska peninsula, Kobuk, and the upper and lower Koyukuk. He pointed out there is additional potential from the subbituminous and lower rank coals. Coalbed methane is just now getting into those areas. He noted there are a few areas where there is production from those lower rank coals. MR. SMITH showed a slide indicating the size of artubic basins in Alaska. The slide contained production figures for the San Juan Basin, the Cook Inlet and the North Slope. He noted that the San Juan Basin shows coalbed methane only and the Cook Inlet and North Slope areas are conventional production. He said the San Juan Basin produces double that of Cook Inlet just from coalbed and has an estimated 50 trillion cubic feet of reserves, compared to the remaining reserves in Cook Inlet of roughly 2.8 trillion cubic feet. He noted the basin area in Cook Inlet is almost twice as big, seven times the coal reserves, and the accumulated thickness is much thicker than San Juan. He felt because of that, Cook Inlet has a huge potential and added it would make economics quite different if 50 trillion cubic feet of reserves in Cook Inlet was shown instead of 2.8 trillion cubic feet. Number 303 MR. SMITH said there was $150,000 available for the program and they were able to drill a 1,245 foot deep core hole. They tried to collect samples from the Northwest Coal Project in deadfall syncline but every time they tried to drill below permafrost, they lost their drill string. Therefore, no samples were received from the project. He stated compiling all of the coal and coalbed methane information for the entire state resulted in the report in committee members folders. MR. SMITH stated the well was drilled approximately two miles west of Wasilla and was drilled in an area that previously was identified as having high potential for coalbed methane. He presented a slide showing the rig used for drilling and several slides on the process. He noted they had nearly 100 percent recovery. He explained the good coals were put in canisters to determine how much gas they contained. There is about one foot of core in each canister and over the two or three month time period, the gas was taken out and they got about eight liters of gas. He said they logged the hole and then plugged the hole with benseal, along with a 20 foot cap of cement. Number 405 MR. SMITH reviewed what was determined during the project. He said almost 1,000 feet of core was received. They encountered 37 feet of coal with the thickest being six and one-half feet. He showed the results which indicated increasing gas with depth, which is good. He stated the second column of numbers on the slide are the numbers to be focused on--the 63 to 245--the increasing gas with depth which is in cubic feet per ton and is calculated on a dry ash free basis--all of the ash and moisture is out of the coal--and is calculated out to cubic feet per ton. Therefore, there is a standardization. He stressed the bottom number of 245 is good for that depth and rank of coal. In the Black Warrior and San Juan basins, the cubic feet per ton gas ranges from approximately 300 to 500, which is at deeper depths. MR. SMITH stated they have multiple targets--shallow increasing gas with increasing depth. He said in the reservoir plate, which may be around 3,000 feet, that could translate to 300-400 cubic feet per ton of gas. He displayed a slide showing a well which got up to 245 cubic feet per ton. He pointed out there are fractures and cleating in the coals. Number 435 MR. SMITH stated what they do know is the gas content, the rank and composition of the coals, how much gas the coals have, etc. He said what they do not know is the absolute permeability. He noted the only way to determine that is through production testing. He felt the private industry would take the well one more step and actually test some things in the future. CO-CHAIRMAN GREEN noted for the record that Representative NICHOLIA had joined the committee. REPRESENTATIVE ALAN AUSTERMAN wondered when the gas is first formed, if that is a one-time situation or does the coal continue to form gas. MR. SMITH responded the coal is putting out gas continuously. As the coal is shallow buried, it gives off small amounts of biogenic gas. He said the coal they drilled was a combination of about 50 percent biogenic gas and 50 percent thermogenic gas, which is typical of coalbed gas. He noted the coal produces biogenic gas until it gets buried to a certain depth with temperature and pressure. Then when the coal reaches bituminous rank, it produces a lot more gas. He stated the coals in the Cook Inlet are still giving off gas. He told committee members most gas production in the Cook Inlet is actually coalbed gas migrated into sandstone. The gas is being produced out of the sandstones there. Number 481 REPRESENTATIVE SCOTT OGAN asked if the disposal of water is an insurmountable problem. MR. SMITH stated the disposal of water could be a problem. He referred the committee to a sheet in their folders called "Issues Concerning Coalbed Methane Development". He said one of the issues concerns the market. In order to break into the market in Cook Inlet, the coalbed methane has to be proven a reliable and productive source. There has to be proof than an X number of cubic feet can continually be produced. In the rural areas, however, there may be a totally different economic situation. A small well which would be uneconomic anywhere else, could provide a bush community with the gas they need, converting diesel generators over to gas. MR. SMITH told committee members another issue is cost. He said a drawback for major oil companies is the cost. In Cook Inlet a 500,000 cubic feet a day well is going to look good but for a major oil company, the size will not cover its overhead. He felt it is going to take small companies and small operators to produce this resource. Number 525 MR. SMITH said the third issue is regulations. He noted there was somewhat of a conflict on regulations when he drilled the well near Wasilla. He explained they permitted as a coal exploration, which on the outside it looked like the regulations fit this type of operation closer than the Alaska Oil and Gas Conservation Commission's (AOGCC) regulations. Currently, the commission is looking very closely at changing their regulations to accommodate small-scale, low-cost operations. The commission is changing their permitting process and bonding requirements. MR. SMITH stated the next problem with regulations is the water disposal. The Alaska Department of Environmental Conservation requires a $1 million bond for exploration drilling. However, no bond is required for gas production wells. He said these coalbed wells will be gas production wells but it is somewhat up in the air how those wells will be classified by AOGCC. He noted the first wells will really be exploratory wells but in order to determine whether or not they are going to produce gas, there is a need to put them on production. He stated the potential for environmental damage is not out of the ground but is off the storage on the rig. He felt there are a number of circumstances which indicate these wells do not need the huge bonding required for an oil well. MR. SMITH pointed out that another issue is the disposal of drilling wastes and produced water. He said on his well, they used all non-toxic drilling muds and put the cuttings into a reserve pit. At the end of the operation, the reserve pit was dried out and grated over. He stated there were no environmental problems involved. He explained that current regulations make disposal of drilling wastes and any produced water very difficult. If the water is fairly fresh and can be treated and discharged in the surface, such as the Susitna River or some large surface stream, there will be no damage. He stressed water disposal will be expensive if it has to be injected back into the formation. He added that the quality of water will not be known until someone starts producing the water. Number 589 MR. SMITH noted there is much talk about the royalties charged and getting leases available. He said new statutes are being written for royalty reduction, which he felt coalbed would fall under. He stated they are looking at new ways to get more leases out but have the 035 best interest finding and the coastal zone management plan to contend with. He thought maybe some of the large block licenses may work for the coalbed methane program. He noted there may be ways to streamline the best interest finding. MR. SMITH stated he did not feel there would an ownership problem. Agencies recognize that coalbed gas is going to fall under oil and gas regulations. Coalbed methane is a movable hydrocarbon, whereas coal should fall under mining. The ownership on state land can be taken care of by putting a couple of stipulations in the lease forms like Colorado does. He noted that Colorado is the only state that addressed ownership in their leasing. Other states have very few problems in regard to state land--it is administered under their oil and gas regulations. The biggest problems and lawsuits coming in are on private land or where there is a combination of private and federal lands. He noted there are some portions of Alaska lands which also have federal coal rights left and that could be a potential problem. Number 635 DAVE JOHNSTON, CHAIRMAN, AOGCC, testified via teleconference and stated the commission is very interested in the development of coalbed methane. He noted in terms of regulations of this activity, the AOGCC does have some interest. Primarily, that interest would be in looking at the disposal of wastes generated, protection of fresh water, and the protection of the correlative rights of adjacent property owners. Coalbed methane is a movable resource, which involves a situation where adjacent property owners can have their resources moved out from under them by development of a well on their neighbor's property. Because of that, there is a great need to protect the interests of those adjacent property owners. He stressed that is the basic principle of why conservation commissions were created originally. Generally, the commission's thoughts tend to go to the more deeper resource associated with oil and gas. MR. JOHNSTON recalled that Mr. Smith had pointed out a few problems with the regulations as currently written, which were tailored more for the deeper resource as found in the North Slope and Cook Inlet areas. He stated AOGCC is engaged in a significant rewrite of its regulations and one aspect of that rewrite will be to take a look at the need of those people who are drilling to very shallow horizons, which coalbed methane would fall under. AOGCC will be tailoring changes to accommodate different casings, different completion techniques, etc. AOGCC will also be altering the requirements of bonding, probably allowing a provision that would allow an operator to come before the commission and submit information that would justify a lowering of the bond amount, which then could be approved by the commission. MR. JOHNSTON said the AOGCC stands ready and willing to work with the operator and other individuals to ensure this resource is extracted. He is particularly excited about the possibility of a viable resource for Native communities. Number 681 DAVE LAPPI, LAPP RESOURCES, testified via teleconference and stated Mr. Smith did an excellent job overviewing the concerns which private industry might have in regard to coalbed methane development in Alaska. He said his company is currently involved in a study for the Department of Community and Regional Affairs, examining the possibility of supplying gas to Native villages, both from conventional sandstone reservoirs and from coalbed methane reservoirs. He felt there is going to be a good opportunity in the state to get at least a few of the villages off of diesel fuel and on to a cleaner and more environmentally acceptable fuel. MR. LAPPI said he also has concerns about access to state lands. Many of the places coalbed methane might be found may not be available in a timely manner under the current state leasing laws. Explorations licensing, which was passed last year, may be (indiscernible) and may cause some of the concerns about access to state lands. He stated one of his thoughts on access to state lands, as far as the leasing laws go, is it might be appropriate to do a best interest finding on all state lands and then allow the leasing to take place where those best interest findings determine it is appropriate. He stressed this would involve a major effort by the state to identify those areas, out of all the state lands, which are appropriate for leasing. TAPE 95-28, SIDE B Number 000 MR. LAPPI said all the state lands would not necessarily have to be on a five year leasing schedule. He noted it might be possible to allow applicants to apply for leases in areas that are not on the current schedule. MR. LAPPI stressed regulatory change is another area of concern. He felt AOGCC is taking the steps to address those concerns to allow low cost drilling. He said bonding is another concern. If someone is trying to drill a well with a low cost structure to supply a village with 100 families, for example, they cannot afford to put up a $1 million bond and hundreds of thousands dollars for other things. He stressed the cost of the bonds, in some cases, would exceed the costs of drilling the well. With only 100 customers, they cannot afford to carry those costs in an economic fashion. He felt bonding requirement changes would allow coalbed methane development to proceed, especially in rural areas. MR. LAPPI stated water disposal is another concern, especially in areas close to big rivers. For example, there are many communities along the Yukon River that have good potential for coalbed methane. He noted the Yukon River has a huge flow--about 100,000 cubic feet per second average and about 1 million cubic feet per second at flood stage. He felt there should not be any problem, on a scientific basis, allowing a few hundred or a few thousand gallons of water a day to be mixed in. He stressed it would not have any impact on water quality in the Yukon. He said those kinds of concerns could be addressed, especially if there is an ability to see through the politics and get back to the science. Number 060 MR. LAPPI stated low cost pipelines are another area the state may want to look at. He noted the Canadians are laying coil tubing pipelines on the surface in tundra areas and non-populated areas. They are using those pipelines as either temporary or in some cases, permanent pipelines to transport gas as far away as 50-60 miles--from the source to the market. He felt the state of Alaska could probably do a similar thing. MR. LAPPI said the final issue he wished to discuss is a royalty reduction. He felt, especially in the rural areas where expensive diesel fuel purchased in the lower 48 and shipped up is being displaced, it might be appropriate to completely eliminate the royalties on gas used in the villages in rural Alaska. He pointed out the state would probably come out ahead if it could encourage the use of a local indigenous resource like coalbed methane, instead of importing the expensive diesel fuel. Number 095 REPRESENTATIVE OGAN asked if there is any rough estimate on the percentage of villages in the bush community that could be served by coalbed methane. MR. LAPPI responded at least one-half of the villages in the bush could be served by coalbed methane or conventional gas. He stated it is not going to be easy to locate the gas reserves because many of these basins have not received any deep exploratory port hole yet. He felt it would be a long-term project to get this to happen. He recalled a climatological study hole that was drilled in Fort Yukon last summer by the U.S. Geological Study (USGS). He said the USGS actually finished the drilling of the well because they found a gassy coal at about the 1,200 foot depth and that coal was at least 29 feet thick. He noted the well is in downtown Fort Yukon. This is the first time anyone has intercepted a coal in that basin, because no one has done much deep drilling. He stressed if some exploratory holes are dug, the resource will be found there. Number 129 REPRESENTATIVE OGAN wondered how coalbed methane is stored. He asked if coalbed methane has to be compressed or is it under natural pressure. MR. LAPPI replied coalbed methane wells usually produce gas at a very low pressure. He added that water production is needed to get the gas to flow. He said in the case of a shallow natural gas well, there may be several hundred to 1,000 PSI pressure depending on the depth of the sandstone. In most cases, there would be a need to provide a compression facility at the surface, near the well, to compress the gas and then get it into a pipeline if it is going to be transported any distance. In the case of a village, there may not be a need to compress the gas much to distribute it. REPRESENTATIVE OGAN asked if coalbed methane can be stored in tanks. MR. LAPPI said yes. He stated compressed natural gas (CNG) is used as an energy source in some parts of the world. From an economic point of view, CNG suffers from the fact that the energy density is very low. He explained a better alternative for transporting natural gas is to liquefy it and turn it into liquified natural gas (LNG) which has to be stored at very low temperatures. However, technology is improving and he felt LNG will be used in the state of Alaska to transport and store natural gas in the future. Number 180 PAUL CRAIG, PRESIDENT, Z-ENERGY, testified via teleconference and stated his company is an independent gas and oil exploration production company attempting to get off the ground as an independent operating in Alaska. He said his company's first project is a north Beluga gas well in the Beluga gas fields. One of the barriers he faced was the $1 million bond required for oil spill contingency, as well as the oil contingency plan. He encouraged the legislature to review the issue and recognize the AOGCC has the technical expertise in place to make a determination whether or not there is a risk for oil spills in exploratory wells. He noted in the case of coalbed methane, they would be drilling into a known gas reservoir with no heavy hydrocarbons in the vicinity. He said it becomes an onerous burden for the small operator. He stressed it is important that science and common sense prevail. MR. CRAIG noted a similar natural gas well in Sacramento Valley in California--bonding requirements never exceed $50,000 for a natural gas well and bonding averages about $25,000. He wondered if changes in the $1 million bonding requirement for natural gas wells would require legislative action or if it could be revised through regulation under the current statute. CO-CHAIRMAN GREEN noted for the record that Representative BARNES had joined the committee. CO-CHAIRMAN GREEN thanked everyone on teleconference and Mr. Smith for his presentation. CO-CHAIRMAN GREEN recalled a statement was made that there might be a possibility of discharging treated water into the Yukon and he reminded the committee there is an adage which has become very popular--"dilution is no solution to pollution." He recalled there was concern about who might have regulation of coalbed methane wells and he felt AOGCC was the proper entity. He pointed out that sand, limestone, fractured shale, etc., are all varieties of reservoirs which produce gas and it seemed logical that coal could be a reservoir and produce gas. He felt operations should be under the oversight of AOGCC. CO-CHAIRMAN GREEN recalled that Mr. Smith had given an example of a piece of coal which actually could hold more gas in place, per unit volume, than a sandstone reservoir. He told committee members that porosity in itself is not the answer. For example, if a large building had many rooms in it and no windows and doors, it would have a tremendous porosity but no permeability. If one or two doors are opened, it has very low permeability but still has the porosity. He said gas has a tremendous viable potential, especially for the remote villages but probably not in an exportable commodity because of that problem. MR. SMITH stated six or seven years ago, Colorado was in the situation that Alaska is in now. Colorado rewrote some regulations to do coalbed methane wells and to cover their leasing. Now, one- third of their production is from coalbed methane and that state only has a very small percentage of the San Juan Basin. CO-CHAIRMAN GREEN announced the sponsor of HB 195 could not be present. Therefore, the committee would go on to hear HB 170. HRES - 03/06/95 Number 322 HB 170 INTENSIVE MANAGEMENT OF GAME REPRESENTATIVE PETE KELLY, PRIME SPONSOR, stated since the bill, itself, was discussed a week ago, he would not overview the bill again. He said there are people on teleconference who would like to make comments and also answer questions. REPRESENTATIVE BARNES made a MOTION to ADOPT CSHB 170(RES), version G dated March 3, 1995. CO-CHAIRMAN GREEN asked if there were any objections. Hearing none, the MOTION PASSED. CO-CHAIRMAN GREEN noted there was a hand out which compares version C to version G of HB 170. REPRESENTATIVE KELLY stated there is no substantive changes in version G, only a tightening up of the language. Number 389 SANDRA ARNOLD, REPRESENTATIVE, ALASKA WILDLIFE ALLIANCE, testified via teleconference. She stated she has spoken with many biologists who all say the same thing about HB 170 and that is, it is biologically unachievable unless there is an intention to have a predator level at zero. She stressed many Alaskans value the fact that Alaska is different--it still does have abundant predators and spends 6 percent more dollars each year on dealing with wildlife in non-consumptive activities. She noted she keeps hearing that the Alaska Department of Fish and Game (ADF&G) needs to stop managing people and start managing the resource. She felt people management is and has always been an inherent part of wildlife management. She pointed out urban hunters should be more than willing to take a year off from moose hunting or travel a little farther to where the caribou and moose are abundant, rather than scream for more predator control. MS. ARNOLD wondered why no one has talked about the cost of HB 170. Intensive management of game is very costly. She said if what the bill asks for is possible, it would be quite expensive to achieve. The sustained yield principle is complex and cannot be taken care of in a two page bill. She noted it is easy to understand concepts--a balanced budget is an easy to understand concept but it is very difficult to obtain. She stressed it takes time, research, and a non-stop effort to get wildlife to do what is desired and HB 170 will not change that fact. She told committee members to let HB 170 die and the existing SB 77 be negated. MS. ARNOLD felt the state should start over and try to come up with a coherent, state-wide predator/prey management policy--one that has broad-based support and where a diverse group of people are invited to the table to discuss. She said this issue will go on and on and there will be lawsuits, controversies, etc. In the meantime, the resource will suffer. She stated her organization would love to settle the issue and move on. They would gladly come to the table in good faith to try and work out a compromise. She stressed HB 170 and SB 77 are only going to perpetuate the strife over predator control in Alaska and continue to divide Alaskans. Number 433 MICHAEL TETREAU, SEWARD, testified via teleconference and stated public lands should not be used for single species management. He said management which favors one or two species also favors equally certain interest groups and not the general public. Public lands should be managed to maintain natural eco-system processes. He noted single species management practiced in the past has resulted in unexpected and undesirable results. He stated the bill also references the restoration of the abundance or productivity of identified big game prey populations. He stressed there is a big difference between abundance and productivity. He felt productivity should be used, not abundance. MR. TETREAU stated HB 170 also eliminates the possibility of placing restrictions on methods or means of taking game, access to game, or human harvest of game. He said the people cannot be ignored and any game management should take a holistic approach. He noted throughout the bill, the term big game prey is used as opposed to large ungulates or moose and caribou. He felt the true intent of the bill is nothing more than predator control. Number 458 JIM RAMSDELL, SEWARD, testified via teleconference and stated when he heard of HB 170 he wondered how anyone could bring up such legislation when Alaska is still reeling from the recent outcry over wolf control efforts. He realized the bill was just another effort by lawmakers to control Alaska's wild in an effort to boost (indiscernible). He said he is a wildlife lover and deals with many of the tourists coming to Alaska to view the wildlife and feel the state's wild spirit. He stated he could not believe the legislature, by their actions, would not care what tourists and outsiders say, while standing with outstretched hands, taking millions and millions of tourist dollars. MR. RAMSDELL stated there is much more to the issue than just predation including weather, food supply, bull/cow ratios, and hunting pressure. He said in view of past legislation, freezers full of moose, caribou, and deer can do much more damage than good. He recommended HB 170 be killed. Number 479 MARK LUTTRELL, PRESIDENT, EASTERN KENAI PENINSULA ENVIRONMENTAL ACTION ASSOCIATION, testified via teleconference and stated if HB 170 is not taken seriously, this bill is just a nuisance bill and gets in the way of real wildlife management. He felt the sponsors are guilty of what environmentalists are often accused of--filing lawsuits to allegedly delay or try to up the costs of a particular agency action. He said if HB 170 is taken seriously and there is some wildlife management (indiscernible) in this bill, he felt it is still a bad bill and the conclusion is that wolves are bad, they should be killed and moose are good, we need them. He stressed there is much more involved in the way people interact with wildlife and there is much more to the ecology of predator/prey relationships. He recommended HB 170 be killed. Number 510 OLIVER BURRIS, FAIRBANKS, testified via teleconference and stated he is a retired wildlife biologist. He stressed he is not a legal wordsmith on the construction of the bill but expressed his major concern is the neglected management on non-management of the state's wildlife resources, primarily moose and caribou. He pointed out that most Interior moose populations are only one-tenth to one-half of former levels. He noted 90-95 percent of the calves are killed before they reach 16 months of age, where they could contribute to the harvest by humans. He added that 75 percent are killed before their first winter, meaning a high winter loss is not being looked at in most of the situations. Moose harvest, typically, is only about three to five percent of the annual calf crop of these moose and caribou populations. MR. BURRIS said no where does anyone come close to harvesting 30-50 percent of the harvestable surplus which is obtainable through any reasonably active management program and does not require the zero elimination of predators. Active management can support high densities of predators. Areas have been seen where active management programs were in place and predator density was restored to the number per square mile per area density much higher than what it was before the active management program started. He stressed the idea there is a need to eliminate predators to have an active management program is false. Number 537 SAM HARBO, PROFESSOR EMERITUS OF WILDLIFE MANAGEMENT & STATISTICS, FAIRBANKS, testified via teleconference and stated there are compelling environmental arguments for greater utilization of northern ungulates. He said more and more ecologists are recognizing that greater dependence and greater utilization on local resources is the environmental way to go. Environmentalists arguing against greater utilization on local resources, particularly renewable resources such as moose, caribou and sheep, are on the wrong side of the environmental issue. He pointed out they have left their value system get in the way of sound environmental reasoning. MR. HARBO stated active management, which he believes the bill should be called, over prey populations undoubtedly is going to require greater effort and hence, costs on the part of the department. He said it does not take much effort by the department to manage a moose population if only about one and one-half percent of the population is being taken, which is restricted to bulls only. He felt passive management does not cost much. Active management is going to cost more. He stressed the environmental advantages of utilizing local resources and much greater returns at the local level warrant, in very selected areas, more management than what is occurring currently. CO-CHAIRMAN GREEN recalled that Mr. Burris had mentioned a low number between one and one-half and three percent of human harvest. He wondered if Mr. Burris was talking about the entire herd. He noted that Mr. Burris had talked about a 75 percent mortality of newborns that were not harvested. He asked if the three percent involve those who mature later or of the entire herd. MR. BURRIS responded the figures he used involve looking at the number of offspring being born into the population. He said the harvest by humans normally equals...he was not talking about the harvest of calves but the harvest of some adults in the population...to between three and five percent of those calves which are being born into the population each year. CO-CHAIRMAN GREEN clarified there would be 75 percent killed by other causes and three percent of a number of calves born would ultimately be harvested. MR. BURRIS said that is correct. He stated when the overall figures are looked at on the number of calves being born, and those who survived until at least 16 months of age are looked at, it will be found that only five to ten percent of those calves have survived to 16-18 months of age. CO-CHAIRMAN GREEN clarified if 100 calves are born, 75 of those will die before they have their first winter and by the time those calves reach 18 months, there will only be five or ten calves. MR. BURRIS said that is correct. CO-CHAIRMAN GREEN clarified that of those five or ten calves, three are harvested. MR. BURRIS responded the equivalent of three are harvested. CO-CHAIRMAN GREEN clarified between 30-60 percent of the harvestable calves are currently being harvested. MR. BURRIS said that was correct and added after all other mortality has taken place. CO-CHAIRMAN GREEN stated the sponsor is saying, therefore, let us get into that 75 percent and reduce that percent so the numbers reaching 18 months will go up. MR. BURRIS stated that is correct. CO-CHAIRMAN GREEN announced HB 170 will be rescheduled at a later date. ADJOURNMENT There being no further business to come before the House Resources Committee, Co-Chairman Green adjourned the meeting at 9:30 a.m.