|
Spill Prevention and Response funding down Sustainability an issue for DEC division which relies primarily on per-barrel charge, response fund interest, cost recovery, fines Kristen Nelson Petroleum News
While all of state government is looking at cuts due to falling revenues from oil production, the Alaska Department of Environmental Conservation’s Division of Spill Prevention and Response is feeling the pinch directly.
The division is funded by cost recovery, fines, investment income and a surcharge on each barrel of crude oil produced in Alaska. With both oil production and interest rates down, the division is underfunded, its director, Kristin Ryan, told legislators in early February.
In a presentation to the Senate Resources Committee Ryan noted that at the current surcharge rate, oil production has to be some 1 million barrels per day to sustain the division’s prevention and response work. Interest earnings from the Oil and Hazardous Substance Release Prevention & Response Fund are “unpredictable and unreliable”; ditto funds from settlements and penalties.
DEC Commissioner Larry Hartig said the response fund is critical, providing more than 50 percent of SPAR’s funding right now. If that funding isn’t fixed, he said DEC would have to take a 46 percent cut in that division because of loss of funds due to declining production.
The fund was established in 1989, Hartig said, and the 5 cents per barrel rate hasn’t been changed.
Division changes Ryan told legislators the division has reduced management overhead by restructuring its contaminated sites program; combining prevention, preparedness and response into one program; streamlining its billing process by automating informal cost recovery; and transferring informal cost recovery work from the Department of Law to the division, for a combined savings of $520,000 annually in operating costs.
The division continues to look at other possible synergies, Ryan said, including spill drills. Those are important, she said, but expensive, and are tied to contingency plans, each requiring a drill. The drills are expensive both for SPAR and for industry, she said, and one change being considered is consolidating drills for certain bodies of water, because in a large spill, the division would call on everyone operating in the area, not just the responsible party.
Possible other funding sources While the oil spill fund is paid by the oil and gas industry, SPAR responds to and is responsible for all spills. Ryan said the division receives some 2,000 calls a year reporting spills.
She said the majority of responses are for refined fuels such as diesel and heating oil, while responses with the largest volume are for produced water.
Hartig said key considerations when DEC talks to industry about funding include who pays and how much. He said the department has had discussions with the oil and gas industry and is working with the Alaska Oil and Gas Association to put together facts for them.
He said bills have been introduced in the past to increase SPAR funding from a motor fuel tax, and while that would cover everything other than home heating oil, that has been resisted because such a tax goes right down to the consumer.
Another alternative that has been proposed is a tax at the first point of distribution - at a refinery or where refined fuel first comes into the state.
Hartig said DEC is going to study that, but noted that this year as he has presented to legislative committees there’s been a dialogue on the problem, indicating an interest in addressing the problem.
| 