Legislature(2015 - 2016)

2016-03-23 Senate Journal

Full Journal pdf

2016-03-23                     Senate Journal                      Page 2200
SB 205                                                                                                                        
SENATE BILL NO. 205 BY THE SENATE RULES COMMITTEE                                                                               
BY REQUEST OF THE GOVERNOR, entitled:                                                                                           

2016-03-23                     Senate Journal                      Page 2201
          "An Act approving and ratifying the sale of royalty                                                                   
          oil by the State of Alaska to Tesoro Corporation and                                                                  
          Tesoro Refining and Marketing Company LLC; and                                                                        
          providing for an effective date."                                                                                     
was read the first time and referred to the Resources and Finance                                                               
The following fiscal information was published today:                                                                           
Fiscal Note No. 1, indeterminate, Department of Natural Resources                                                               
Governor's transmittal letter dated March 21:                                                                                   
Dear President Meyer:                                                                                                           
Under the authority of Article III, Section 18, of the Alaska                                                                   
Constitution, I am transmitting a bill relating to approval and                                                                 
ratification of the sale of royalty oil by the State of Alaska to Tesoro                                                        
Refining and Marketing Company LLC (Tesoro).                                                                                    
The Commissioner of Natural Resources has determined that it is in                                                              
the best interest of the State to take royalty oil in-kind. The bill would                                                      
approve and ratify the "Agreement for the Sale of Royalty Oil                                                                   
Between and Among the State of Alaska, and Tesoro Corporation, a                                                                
Delaware Corporation and Tesoro Refining and Marketing Company                                                                  
LLC, a Delaware Limited Liability Corporation." The agreement                                                                   
provides for the sale of 20,000 to 25,000 barrels a day of the royalty                                                          
oil, subject to certain nomination provisions, which the State would                                                            
take in-kind from lessees on the North Slope. The deliveries of royalty                                                         
oil under the agreement with Tesoro have an estimated start date of                                                             
August 1, 2016, and continue until July 31, 2021. The royalty oil                                                               
would be sold to Tesoro at a price in the agreement calculated to equal                                                         
or exceed the value that the State would obtain for the royalty oil if it                                                       
was taken in-value. The agreement includes provisions to support                                                                
employment of state residents and in-state processing.                                                                          
This bill is the culmination of diligent analysis and public process that                                                       
are imperative for responsible resource stewardship. The Department                                                             
of Natural Resources and the Alaska Royalty Oil and Gas                                                                         
Development Advisory Board (Board) considered the fiscal,                                                                       

2016-03-23                     Senate Journal                      Page 2202
economic, societal, and environmental impacts and benefits of the                                                               
agreement. The Department of Natural Resources issued a Final Best                                                              
Interest Finding and Determination on the agreement that included                                                               
analysis of the factors for the sale of royalty oil in AS 38.05.183 and a                                                       
detailed response to public comments received on the sale.                                                                      
Additionally, the Board held a public hearing on the sale. In                                                                   
accordance with AS 38.06.050, the Board voted to approve a written                                                              
recommendation and report on March 15, 2016, recommending                                                                       
legislative approval of the agreement. A copy of the Final Best Interest                                                        
Finding and Determination with the proposed agreement as Exhibit 1,                                                             
the Board resolution recommending approval, and the report of the                                                               
Board required by AS 38.06.070(c) are available from the Department                                                             
of Natural Resources.                                                                                                           
This bill would allow the State to obtain the maximum value for its                                                             
royalty oil. I urge your prompt and favorable action on this measure.                                                           
Bill Walker