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Vol. 18, No. 15 Week of April 14, 2013
Providing coverage of Alaska and northern Canada's oil and gas industry

Permitting bill advances

Alaska House passes legislation that would ‘consolidate’ oil and gas approvals

Wesley Loy

For Petroleum News

The Alaska House of Representatives has passed a key piece of legislation in the governor’s push to reform permitting for development projects.

House Bill 129 passed April 9 on a 27-12 vote.

The bill then went to the Senate, where similar legislation, Senate Bill 59, was pending with five days left in the legislative session.

HB 129 would allow the state Department of Natural Resources to “consolidate” approvals for oil and gas exploration and development.

The legislation was introduced at the request of Gov. Sean Parnell, whose administration wants to streamline permitting and cut out “repetitive” approvals.

House members added language to the bill to address a March 29 opinion from the Alaska Supreme Court. The court said the state was constitutionally required to consider the “cumulative impacts” of an oil and gas project as it progresses from leasing into the exploration, development and production phases.

The ruling seemed to hold potential for more, not fewer, permitting steps.

But the “legislative findings” House members added to HB 129 basically say DNR already does consider cumulative impacts.

What bill would do

In offering HB 129, Parnell said it would “reduce the time required to get oil into production and flowing through” the trans-Alaska pipeline.

Boosting oil production, of course, is a political imperative for Alaska elected officials, as oil revenue sustains the state budget and North Slope output is falling.

The bill would allow DNR to approve oil and gas exploration or development over a large geographical area, across multiple leases. An approval would be valid for up to 10 years.

DNR officials provided legislators with examples of current policy, versus what could be expected if HB 129 becomes law.

A lessee would face six public notice and comment periods to push a project through the seismic, exploratory drilling and development phases, the current policy example showed.

Under HB 129, only two public notice and comment periods would be required, one for the exploration phase and another for the development phase.

The administration believes the legislation would accomplish a number of things. First, it would benefit the public by giving everyone a chance for input at the beginning of exploration or development. Second, it “provides certainty to the oil and gas industry that exploration and development projects may proceed within defined parameters.”

HB 129 also allows stipulations to be approved before a company develops site-specific exploration or development plans, the administration says.

Supporters and critics

Some industry players, including Linc Energy and Brooks Range Petroleum, in March wrote letters of support for the legislation.

Barton Armfield, chief operating officer for Anchorage-based Brooks Range, wrote that the current permitting process around plans of operation, exploration and development “is inefficient and cumbersome.”

The legislation “will reduce the permitting process by months, which is especially critical because exploration companies only have a few short months to operate during the North Slope exploration season,” Armfield wrote.

Charlotte Brower, mayor of the North Slope Borough, also sent a letter to the governor offering qualified support of the legislation. She ended her letter by saying adequate opportunities should be left in place for comment “by communities located near projects that are developed.”

Other interests oppose the legislation.

“The proposed changes would end review of specific project plans, for both exploration and development. Rather, once a decade DNR would establish general conditions for exploration and development that operators must meet,” David Arnold, executive director of the Fairbanks-based Northern Alaska Environmental Center, wrote in a March 18 letter to legislators. “Without plans of operation to review, the burden would be on local residents to identify all potential impacts to fisheries, wildlife and other subsistence resources before any site specific information on all projects is available.”

Supreme Court answered

The legislative branch wasted little time answering the judicial branch, as House members added extensive legislative findings to HB 129 in answer to the state Supreme Court’s March 29 ruling.

The high court held that DNR is required to write a “best interest finding” only for the leasing phase of an oil and gas project. That was a victory for DNR, reversing a lower court’s order for the department to make written best interest findings not only for lease sales, but for subsequent phases such as exploration and development.

The Supreme Court further held, however, that the state was constitutionally required to consider the cumulative impacts of an oil and gas project at its later phases.

That holding cheered environmental and Native groups that had sued DNR in 2010.

The legislative findings in HB 129 say that DNR each year calls for public comments “to determine whether there is substantial new information that justifies a supplement to the best interest finding for the most recent areawide lease sale.”

The findings add that “in addition to those efforts by the Department of Natural Resources, the processes for issuing numerous other state, federal, and local permits and authorizations ... provide the public with timely and meaningful notice of information related to the effects of leasing, exploration, development, and transportation.”

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