RDC’s 24th Annual Conference Presentations
Commissioner Tom Irwin, Alaska Department of Natural Resources
Introduction: Ladies and Gentlemen, Distinguished Guests, and RDC members. I'd like to thank the RDC for this invitation to speak today. It is a Privilege to be here. As you know I clearly support RDC and the important role it has in Alaska.
I think most in the room know me, but for those who don't, let me comment on how I got involved in State Government. First I said the word never, in I would never work in a government job, and Second and most importantly I have been in resource development my full career and I agree with the Governor on how critical it is to have resource development and the need to generate new wealth for the future of Alaska. Commissioner of DNR was an opportunity to join Governor Murkowski and participate on a team that wanted to move resource development and the State forward.
People. In addressing any problem, you have to start with people, and people make a difference. I think it is important for you to hear from me that the Governor has put together a group of commissioners that do work together. The support from the Governor's office, from the Alaska delegation Senators Stevens and Murkowski and Congressman Young, and the staff in Washington have quickly and efficiently responded to numerous requests for support. In my position I can't stress enough how important this is. I would also like to recognize the staff and employees at DNR. They are incredibly hard working and they deserve the credit for the progress that has been made. The Governor, Gov's staff, Cabinet and DNR are some of the best people I have ever worked with.
Along with this I am pleased to announce that we are continuing to strengthen the skills at DNR. Marty Rutherford has agreed to return to DNR where she will be one of the two Deputy Commissioners. It took a lot of pushing on Marty but when you want the best team the work is worth the effort. Welcome back Marty. I am equally pleased to announce that Sean Parnell has agreed to accept the position of Deputy Director of Oil & Gas. Welcome Sean.
I will take this opportunity to give a quick update on what DNR is doing. Obviously I can only highlight a few of the initiatives and I know you realize that this just scratches the surface of what DNR is all about.
Oil and Gas is the priority and we have incredible reserves:
22% of total US oil reserves (7.1 billion barrels), 19% of total US gas reserves (36 tcf) and 19% of total US oil production (1-million barrels oil per day) and the gas and oil numbers don't include the future resources. Incredible potential.
Too often I hear and read negative comments but we have real opportunity and we need to keep focused and move forward with a clear purpose to maximize the potential from the resources. We need to explore – the resource is there. As an example, Congratulation to Unocal Corp. for their recently announced success.
Progress has been made on a number of initiatives for oil and gas development:
DNR is-more aggressive in offering lease sales for state lands and waters on the North Slope, in the North Slope foothills, and in Cook Inlet. Leased acreage is at record amounts (greater than 5.6 million) and there are more producing units. We have initiated oil and gas leasing in a frontier area -- the Alaska Peninsula.
Provide a “short history summary” of oil & gas in the Alaska Peninsula. Must protect another resource "salmon” this started with the leadership of Harvey Samuelson, Robin Samuelson, Nels Anderson and the BBNC. DNR is proceeding with a best interest finding to be concluded for exploration licensing next fall to be followed by an areawide lease sale in the fall of 2005.
The state is interested in assessing the oil potential in ANWR. We have contracted with ASRC to evaluate the costs and potential benefits of drilling a stratigraphic well offshore of ANWR. We expect that analysis to be available in the next few months.
Over the last 30 years, the winter oil exploration season has decreased by half. Extending the winter exploration season in an environmentally responsible manner is an important challenge that DNR faces. We need longer not shorter exploration seasons. A few weeks ago a scientific study designed to address this challenge was initiated. We expect to gain information that will help DNR decide what equipment can go out on the tundra quicker and under what conditions.
DNR is the state's EIS project leader for NPRA West and reopening NPRA East as well as the Alpine Satellite Development Project. These are important oil and gas exploration and development areas for Alaska.
We are working with the Department of Transportation on an Industrial Road from the Dalton Highway near Pump 2, across the foothills to the Colville River near Nuiqsut. We believe that this will open access for new development in the foothills.
DNR is also negotiating a RIK oil sale with Flint Hills, who is in process of purchasing the Williams refinery in Fairbanks.
On the Gas side, again we have large reserves and resource potential, I am convinced there is a clear need for Alaska gas in the US market and discussions are in progress with producers, pipeline companies and others. We need resolution of the energy bill in congress.
We recognize the current producers have completed success stories time after time, and have professionally managed and operated their properties. They deserve recognition for this work.
In addition the Governor and I believe that the Independent Companies represent a significant potential for investment in Alaska's future and they will need fair access to land, facilities and pipelines. Without that access, why explore?
A lot of our "independent" producers have shown an interest in Alaska. The Governor is planning a meeting with the Independent companies and potential Explorers and Investors in Juneau on December 9. The goal will be to have open communications on what is needed to expand exploration and development in Alaska and to reaffirm they are welcome.
Coalbed Methane - Its development has the potential to provide tremendous long-term benefits for the State of Alaska. And as a side note it could be critical for energy requirements in South central Alaska. Of course, in order to realize that potential, it must be done right. Mark Myers, Pat Galvin both from Oil and Gas and I visited locations in Colorado, Wyoming and Montana to see firsthand what coalbed methane development is all about. What I learned is that there is good coalbed methane development and there is bad coalbed methane development. Alaska wants to do it right. DNR wants to do it right. I have already announced in public meetings that Pat Galvin of DNR will lead an effort by state agencies and the Mat-Su Borough to listen, evaluate what has happened in other developments, hold public workshops and develop specific rules to be followed by DNR when exercising its discretionary authority on state leases in the Mat-Su area. We also can't overlook that these activities are just as likely to occur on non-state lands. Even though DNR does not have the same authority over such activities on non-state lands, we can help identify what rules can be used by those entities with the authority - such as the Mat-Su Borough's planning and zoning powers.
In the meantime, DNR is allowing Evergreen to drill core holes for geologic samples and to conduct small-scale production tests of coalbed methane resources. These activities are necessary for companies and the state to obtain valuable data to evaluate the future of coalbed methane in Alaska. There is no substitute for good data - environmental, social, geologic, and economic.
Streamlining Government Some of the first initiatives of this administration were to combine several other divisions with DNR.
DGC and the Alaska Coastal Management Program were incorporated into the Office of Project Management and Permitting in DNR and an aggressive schedule was established. Legislation passed last year required revised regulations to be in place by July 1st 2004 with a program that is designed for Alaska and one that meets the approval of OCRM. The staff is well on their way to meeting this deadline with the help of some of you folks and some good contractors that know their business. We expect to have draft regulations out for public review in January.
Habitat was transferred from ADFG to the Office of Habitat Management and Permitting DNR in May. We have signed an MOU with Fish and Game to resolve "who does what". This was necessary so that we didn't duplicate habitat management and project review. We have already seen improvements in communications.
In both cases the sky didn't fall, permits continued, and efficiency is being achieved.
I give the credit to committed people like Bill Jeffress, Kerry Howard, Randy Bates, Al Ott, their supervisors and the employees who have managed and worked through the changes. This work is appreciated.
DNR is the project leader for several large mining projects around the state:
We expect state authorizations for POGO to be issued within the next few weeks.
We anticipate the Forest Service to release the draft EIS on Kensington by the end this year and
We are involved with oversight of operating facilities and annual reviews for Red Dog, Usibelli, Ft. Knox, True North, and Green's Creek mines.
Recordable Disclaimers Until this year, the only method to resolve ownership of land under navigable waterbodies was through lengthy Quiet Title actions in court. The Department of Interior adopted new regulations that allow BLM to issue Recordable Disclaimers of Interest for navigable waters. Soon after those regulations were adopted, DNR applied for 14 rivers and 8 lakes. In October, BLM issued the first-ever disclaimer in the nation to our state for the Black River in northeast Alaska. We will continue to apply for these disclaimers to resolve the question of land ownership for navigable waters once and for all. Cooperation with BLM under the leadership of Henry Bisson has been exceptional. We have had the same cooperation with the COE and MMS. We need more from EPA and US Fish & Wildlife.
Time doesn't allow for talking in detail about the record land sales and the 24,000 acres available for sale over the counter, the efforts to encourage new value added timber processing enterprises in the Interior and Southeast, the 90 sites that will be available for authorizing aquatic farms in February 2004, keeping Parks open with less money, or the significant successes of the fire crews this year, the fire wise program, and the records set in the recorders office.
In closing we understand that companies don't due business in Alaska just because they love it here. Their business investments must make a return on investment to stay in business. In many cases Alaska competes for this business globally. We intend to continue to look for ways to attract business to help us responsibly develop our resources.
