State of Alaska Division of Oil and Gas 1 2007 Alaska Coastal Conference Bruce Anders Chief, Leasing and Permitting Section

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State of Alaska Division of Oil and Gas

2007 Alaska Coastal Conference

Bruce AndersChief, Leasing and Permitting Section

www.dog.dnr.state.ak.us/oil/[email protected]

269-8775

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Mission:“Maximize the physical recovery of the state's oil and gas resources …in an environmentally sound and safe manner, and the economic revenue from these resources.”

•Hold lease sales •Collect Royalties•Manage Units•Collect, store and process seismic data•Administer leases

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Royalties to Permanent Fund & School Fund:$610.7 Million

General Fund Royalties, Bonuses, Fees & Rents:$1.7 Billion

Taxes:$1.9 Billion(Oil & Gas Property Tax + Income Tax + Severance Tax)

The State Revenue Pie

FY 2006 Unrestricted Revenue

Non-Petroleum11%

Petroleum

89%

Total Royalties, Bonuses, Rents, Fees & Settlements:$2.3 Billion

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State of Alaska Division of Oil and GasAlaska Historic and Projected Oil Production

1958 - 2025

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

Pt Thomson Unit

NPR-A

Other North Slope

Badami

Northstar

Colville River

Duck Island Unit

Milne Point Unit

KRU IPA+Sat

Greater Pt McIntyre Area

PBU IPA+Sat

Cook Inlet

Forecast

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of

Ba

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ar

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• ADNR – AS 38.05.027 Management of legislatively designated state game refuges and critical habitat areas is the co-responsibility of

ADF&G (AS 16.20.050-060) and ADNR. Lessees are required to obtain permits from both ADNR and ADF&G. – AS 38.35.010-260 Right-of-way leasing for pipeline transportation of crude oil and natural gas is under the control of the

commissioner of ADNR. The commissioner shall not delegate the authority to execute the leases.– AS 38.05.127 Provides for reservation of easements to ensure free access to navigable or public water.11 AAC

53.330Implementing regulations for the reserving of easements to ensure free access to navigable or public water.– 11 AAC 83.158(a) A plan of operations must be approved by the commissioner, ADNR, if (1) state owns all or a part of the

surface estate, (2) lease reserves a net profit share to the state, (3) state owns all or part of the mineral estate, but the surface estate is owned by a party other than the state, and the surface owner requests such a plan.

– 11 AAC 96.010 Operations requiring permits, including the use of explosives and explosive devices, except firearms.– 11 AAC 96.140 Land use activities are subject to general stipulations that will minimize surface damage or disturbance of

drainage systems, vegetation, or fish and wildlife resources

• ADNR/DO&G – AS 38.05.035(a)(9)(C) Requires geological and geophysical data to be kept confidential upon request of supplier.– AS 38.05.130 Allows the director, DO&G, to approve oil and gas exploration and development activities in the case where the

surface estate is not held by the state or is otherwise subject to third party interests, provided the director determines that adequate compensation has been made to the surface estate holder for any damages which may be caused by lease activities.

– AS 38.05.180 Establishes an oil and gas leasing program to provide for orderly exploration and development of petroleum resources belonging to the state of Alaska.

– 11 AAC 96.010-150 Geophysical Exploration Permit provides controls over activities on state lands in order to minimize adverse activities

• ADNR/DL – AS 38.05.075 Establishes leasing procedures under public auction, including tide and submerged lands, bidding qualifications,

and competitive or non-competitive bidding methods– AS 38.05.850 Authorizes the director to issue permits, rights-of-way or easements on state land for recovery of minerals from

adjacent land under valid lease.– 11 AAC 80.005-055 Pipeline Right-of-way Leasing Regulations.– 11 AAC 93.040-130– Requires a Water Rights Permit for the appropriation of state waters for beneficial uses.– 11 AAC 96.010-140 Land use permit activities not permitted by a multiple land use permit or lease operations approval.

Authorities

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Authorities (short list)• Title 38

– 38.05.132 Oil And Gas Exploration License

– 38.05.134 Conversion To Lease

– 38.05.135 Leasing Generally; Payments And Interest

– 38.05.177 Shallow Natural Gas Leases

– 38.05.180 Oil and Gas Leasing

• 11 AAC 83.158, .346 & 96.10– 11 AAC 83.158 & .346 Plans of Operations– 11 AAC 96.10 Geophysical Exploration Permits

• Best Interest Finding Mitigation Measures• The lease

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Achievements in 2006

Leasing/Permitting

Conducted five areawide lease sales in FY 2006

1.6 million acres leased, with 402 bids on 360 tracts, and 41 bidding groups participating

Resulted $38.2 million in bonus bids

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ACMP Review Processin

Oil and Gas world

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Typical A List Activities:

On-pad civil works

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Electrical Skid on Pad

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VSM (Vertical Support Member)

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Typical B List Activities

• Typically routine off-pad activities

• Foreseeable disturbance to tundra

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Off-pad Snowfence PBU S Pad

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Onshore off-pad Pipeline Construction(construction of new pipeline on new VSMs)

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This is HIS ground! Palm Bridge Crossing

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Alpine Airstrip

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C List Activities

• New field development -- off-pad construction projects

• Plans of Operation (not on B-List)

• Exploratory Drilling on NS

(AKA Individual Project Review)

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Gas Processing FacilityNinilchik Unit…

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Gas Processing Facility-- Prudhoe Bay Unit

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Tarn Drill Site (KRU)

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Alpine CD 3 Construction

Winter of ‘05

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Onshore Ice Pad Exploration NS

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Offshore Shallow Water Exploration

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Geophysical Exploration Permit


Oil & Gas Permitting Process• Most work:

– Exploration licenses, – Lease sales, – Plans of Operation

• Linking of BIF and ACMP review

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Oil & Gas Permitting Process

• North Slope Areawide Best Interest Finding (BIF)• Need BIF every 10 years• 4/19 published the 10 year Preliminary BIF and

“Consistency Analysis”• 90-day public comment• Public hearings• FBIF Proposed CD• 10 days, Final CD


Mitigation Measures• AS 38.05.035(e): Director has authority “to impose conditions or

limitations, in addition to those imposed by statute, to ensure that a resource disposal is in the state's best interests.”

• DOG conditions plans of operation, exploration, or development and other permits based on these mitigation measures.

• These measures were developed after considering terms imposed in earlier competitive lease sales and comments and information submitted by the public, local governments, environmental organizations, and other federal, state, and local agencies.

• Additional measures will likely be imposed when lessees submit a proposed plan of operations.

• The most recent mitigation measures will be applied to all operations, regardless of when the lease was issued.

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Single Agency vs. OPMP Coordinated Review

• DOG performs single agency review where

• DOG approval is only state agency authorization necessary other than DEC permits

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Plan of Operations (11 AAC 83.158/.346)• Must contain sufficient information for the commissioner

to determine the surface use requirements and impacts directly associated with the proposed operations.

• Must contain statements/maps depicting:– the sequence and schedule of the operations– projected use requirements directly associated with proposed

ops– location and design of well sites, material sites, water supplies,

solid waste sites, buildings, roads, utilities, airstrips, and all other facilities and equipment necessary to conduct the proposed operations;

– a description of operating procedures designed to prevent or minimize adverse effects on natural resources/uses, historic/archeological sites, and public use areas

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ACMP Review of POOs• North Slope: 90% are A and B List

reviews. • Cook Inlet: Mostly Single Agency Reviews.

No A/B List.• Individual Project Reviews (OPMP

Coordinated)– Exploration Wells– Development (New Fields)– Expansion of Facilities (Satellites)

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Single Agency Review Example – Plan of Operations

• Pre-application meeting and identification of issues and authorizations necessary

• Applicant submits plan, CPQ, and Consistency Analysis addressing Statewide and Resource District Enforceable Policies, and other material

• DOG, OPMP and other resource agencies review application material and determine completeness and if OPMP or DOG coordinates review

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DOG Requests/Recommendations

• Finalizing ABC list would streamline Cook Inlet permitting, and to a lesser extent, NS

• Exploration wells on B list

• Predictability on single vs. coordinated agency review

State of Alaska Division of Oil and Gas 1 2007 Alaska Coastal Conference Bruce Anders Chief, Leasing and Permitting Section

Documents

state lands

gas resources

gas exploration

natural gas

states oil

gas leasing program

state revenue pie fy

designated state game