Legislature(2015 - 2016)BUTROVICH 205
02/23/2015 03:30 PM Senate RESOURCES
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SJR 13-OCS OIL & GAS EXPLORATION/DEVELOPMENT 3:58:52 PM CHAIR GIESSEL announced SJR 13 to be up for consideration [version 29-LS047\H was before the committee]. SENATOR COGHILL, prime sponsor of SJR 13, Alaska State Legislature, Juneau, Alaska, said he used the strongest language he could to direct the Bureau of Ocean Energy Management to "cease and desist" from taking the oil-rich Chukchi Sea leases off the market, because it is mismanagement of the energy potential of America and Alaska. 4:01:40 PM SENATOR COGHILL moved to adopt CSSJR 13(RES), version 20- LS0471\E, as the working document. There were no objections and it was so ordered. CHAD HUTCHISON, staff to Senator Coghill, Alaska State Legislature, Juneau, Alaska, explained that the changes in the proposed committee substitute (CS) to SJR 13 came after further conversations with Mike Pawlowski in Senator Murkowski's Office. The resolution was designed to oppose recent federal restrictions relating to the Chukchi and Beaufort Seas. There are three big action points that distinguish this resolution: 1. They are concerned about future leases in the Chukchi and Beaufort Seas. 2. They are concerned about active leases and whether oil companies will have the ability to renew those active leases. 3. They are concerned about mitigation as it relates specifically to the Hanna Shoal section of the Chukchi Sea that will make it cost prohibitive for exploration, production and development. He showed maps depicting historic and active oil leases and where activity is being restricted in 2017-2022. 4:06:30 PM He explained that the Chukchi Sea is the important area that has a lot of petroleum-related activity going on, particularly in the Hanna Shoal area, because at least half of it is a high petroleum area with active historical leases, Shell and Repsol being the most important ones. Shell has three adjacent leases and Repsol has seven; another five are immediately adjacent to that restricted area. All of the leases cover similar prospects and the concern is that the active leases could be affected, because of the uncertainty of their renewal. Another concern is that the cost of mitigation efforts that will be imposed in the Hanna Shoal area will be so high that the federal agency will manage it as wilderness, even though it would be in violation of ANILCA. SENATOR MICCICHE asked why Hanna Shoal was restricted. MR. HUTCHISON answered because it is a high value area for marine life. SENATOR COSTELLO asked what the president is using as a basis for his alleged authority. MR. HUTCHSON answered that he does have the ability under the 43 USC 13.41(a) of the Outer Continental Shelf (OCS) Lands Act that says the President of the United States may from time to time withdraw from disposition any of the unleased lands of the OCS. 4:13:13 PM CHAIR GIESSEL said it seems like the excluded area is almost an ocean zoning step. MR. HUTCHISON said that many would agree with that analysis. SENATOR STEDMAN commented that they should consider combining the timing of this resolution with the March report coming out from the National Petroleum Council. SENATOR COGHILL said that was an excellent idea. It's important to make a live communication, because silence is acquiescence, and "the shoes are dropping fast." SENATOR STEDMAN suggested deleting "without adequate public process" on page 3, line 30, to make the statement stronger. 4:18:30 PM SENATOR COGHILL agreed with the goal, but said there is no way this will get done without public process. MR. HUTCHISON responded that the initial draft of the resolution did not have "without adequate public process." That was a recommendation from Senator Murkowski's Office. SENATOR STOLTZE said he thought it reads much better without that language. SENATOR COGHILL responded that a resolution should be as direct as possible and he would like to take it out. 4:21:28 PM SENATOR COGHILL moved to delete ", without adequate public process," on page 3, line 30. There were no objections and the amendment was adopted. 4:22:04 PM KARA MORIARTY, President and CEO, Alaska Oil and Gas Association (AOGA), said they support SJR 13. She said the Arctic OCS is the largest undeveloped energy basin in the United States and the next generation of energy security for the country and the state. She said the Arctic OCS is a mega-resource, with an estimated 27 billion barrels of oil and 132 tcf/natural gas. In comparison, the TransAlaska pipeline System (TAPS) has carried just 17 billion barrels of oil in 30-plus years. So, truly, oil and gas development in the Beaufort and Chukchi Seas could feed into TAPS and maintain viability for years to come. Oil and gas development in the OCS means more jobs for Alaskans. It's predicted to create an annual average of 35,000 direct and indirect jobs over the next 50 years in Alaska, alone, and those jobs would likely represent a total payroll over that time span of $70 billion. Since 1971, Ms. Moriarty said 84 wells have been drilled in the Arctic OCS, all without incident. Industry has worked with communities to incorporate traditional knowledge with decision making, establish conflict avoidance agreements, and impose seasonal drilling limitations. New regulations and research can further ensure that development and environmental protection can co-exist. She said Mr. Hutchison did a great job of summarizing their concern with the restrictions in the current five-year leasing plan and the unknowns they bring up. MS. MORIARTY said that as the sea-ice stays open longer and other countries move forward with exploration and development in their waters, and transportation through the ice-free Northwest Passage increases, Alaska's Arctic seas will be left largely unattended. With little infrastructure in place, communities along Alaska's northern coast will be at the greatest risk with no ability to respond. So, development of the Arctic OCS for exploration and development would bring that needed infrastructure to a very rural on-shore area. The industry's continued presence would provide security and response capabilities, should they be needed. CHAIR GIESSEL, finding no further comments, closed public testimony. SENATOR COGHILL recapped that it is time to speak up. A small village near Wainwright was anticipating how it could support that industry and was happy that regulations were structured to around their best hunting and fishing times. The resolution doesn't say don't do anything, just that those leases in an oil rich area should not come under the cloud that this president just put them under. CHAIR GIESSEL said people at Pt. Lay were also looking forward to the opportunities industry would bring. SENATOR COSTELLO moved to report CSSJR 13(RES), version E, as amended, from committee with individual recommendations and attached fiscal note(s). There were no objections and CSSJR 13(RES) was reported from the Senate Resources Standing Committee.