RDC’s 25th Annual Conference Presentations
Tom Irwin, Commissioner, Alaska Department of Natural Resources
THURSDAY, NOVEMBER 18, 2004
Introduction: Ladies and Gentlemen, Distinguished Guests, and Resource Development Council members. I’d like to thank 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 compliment RDC on this 25th Silver Anniversary Annual Conference. To effectively survive this long demonstrates a lot of hard work, good decisions, real commitment, and staying power. Also the title of the conference “Competing Globally for Industry Investment” couldn’t be more appropriate.
This Administration recognizes that businesses come to Alaska based on business plans where they get the highest return on their investment, the best cash flow, and the greatest security. Alaska must compete with the world for business. I recently read an article in the Wall Street Journal that I believe captures this idea very well. It said that “government is a key part of society and vital to all of us, [but] it makes no money of its own. Successful businesses are the engine of a healthy economy and government is the support for that engine.” Resource development is the economic engine for Alaska.
The Administration understands that it has a major role in creating a positive business environment for the economic engine. Support can come in providing certainty and reliability in processes and timing, reductions in delays, eliminating duplication of procedures and unnecessary standards and regulations that often do not contribute to environmental protection but increase a company’s project costs. It also means coming to the table to assist in resolving issues so a project can quickly move forward. Quoting the Governor “if resource development companies take their environmental responsibilities seriously, then this administration will step in and aggressively defend these companies against those who attack your projects”. From my vantage point I can say this is being done and I would ask where else can you get this kind of support?
Significant progress is being achieved on promoting a positive business environment in Alaska. I will provide a quick update on some of this Administration’s initiatives.
The large mine permit team within DNR was enhanced to facilitate all large project permitting. This approach is effectively helping mine projects and has been expanded to Oil and Gas. Does it work? One new company progressed from lease issuance to permits in hand for a North Slope offshore well in 3-months, a significant accomplishment.
DNR was designated as Lead Agency. This has facilitated interagency cooperation, consolidation of responsibilities, and provides an additional path for efficiently advancing resource development. DNR has numerous goals. In addition we are receiving hundreds of comments about issues that have been unresolved for years. We continue to review the priority work list to make sure we are doing everything possible for resource development. We want your continued input.
The Alaska Coastal Management Program was moved to DNR to streamline the process and make it more objective and accountable. The revised program has been submitted to NOAA for program approval. ACMP has required significant effort and a lot of stress to get to this point.
The functions of the Habitat Division were combined within DNR to facilitate permitting. Last year, the office operated with 18% less staff and an 11% lower budget, and yet exceeded all its targets. More than 90% of all applications were approved and all unauthorized projects and permit violations were resolved. It is important to note that I did not have to hear one elevation. The sky didn’t fall when Habitat came to DNR and they did not have to compromise their principals. It was not just don’t say no, but how can we take care of the habitat and still move a project forward. I compliment the Habitat staff. I also want to recognize the cooperation received from the Alaska Department of Fish & Game during this process.
In July 2004, the Governor’s office formed several sub-cabinets to allow commissioners to deal with issues or to push for process improvements on a cabinet level but with a smaller, more effective group. A Natural Resources Development Policy sub cabinet, comprised of DNR as the lead, ADF&G, DEC, DOT, DOL, DCED, Labor, and the D.C. Office, was formed to promote resource development. I am pleased with the participation of the various commissioners and the resolution of issues being addressed.
Oil and Gas
The opportunity to advance the gas line project and move Alaska’s gas to market is real. The Alaska Congressional Delegation accomplished the first major step by successfully passing federal enabling legislation for the Alaska Gas Pipeline. The legislation contains several critical provisions including: expedited judicial review, priority permit processing by FERC and other federal agencies, loan guarantees, accelerated depreciation for the pipeline, and conditioning plant benefits.
Significant Alaska gas reserves, potential for additional discoveries, U.S. gas supply and demand calculations, predicted gas prices, and positive Administration and State Legislative support increases the potential for meeting the challenges to achieve a gas line.
Good faith negotiations continue independently with the Producers and with TransCanada. The State remains available to continue discussions with Enbridge and any other entities, and available to provide support to ANGDA and the Port Authority. Staff from the Department of Revenue and DNR have built a complex, robust economic model to analyze gas sale and pipeline options. The state continues to evaluate taking an equity position in the gas line.
The state is moving forward with processing TransCanada's application for a gas line right-of-way across State land from Prudhoe Bay to the Canadian Boarder. DNR produced a draft lease for public comment and will hold public hearings in November and December. The final finding will be completed by mid-February 2005.
DNR’s Division of Oil and Gas and Division of Geological and Geophysical Surveys conducted fieldwork to further evaluate the potential for oil and gas in the Alaska Peninsula. Results to date are very encouraging and we are starting to see significant industry interest. The Alaska Peninsula work started from discussions with Alaska Peninsula residents and the Governor early in 2003. A best interest finding is in progress for the proposed sale. An oil and gas lease sale is tentatively scheduled for the fall of 2005.
This fall, the state received $14.8 million in bonus bids for leasing 366,080 acres in its Beaufort Sea and North Slope area wide oil and gas lease sales. The Beaufort Sea lease sale drew the most money of any Beaufort Sea sale since 1997. The participation by 10 independents and one producer is a clear indication that the state’s efforts to encourage oil and gas companies to enter the Alaska market are bringing results. Companies are voting with their pocketbooks and saying Alaska is a good place to invest.
One of the serious problems facing oil and gas exploration is that the winter season is becoming shorter. In fact it has been effectively cut in half since the early 1970’s. This has increased exploration costs. To help solve this problem DNR, with the appreciated support of several companies, worked with the U.S. Department of Energy to conduct scientifically valid research to extend the season without compromising the environment. The Governor previously announced that the program, although still in progress, looked positive. He wanted to give companies early notice for exploration planning. The work has progressed to draft form and is being reviewed by an independent group. Results continue to be very encouraging for lengthening the exploration season.
The Governor has announced that the state will move forward on the roads to resources program. Priority evaluation is being given for access to Bullen Point, the Colville River bridge and road, and the East to West foothills road.
The Governor has also announced his strong support for continued progress on reforming state permitting and MOU’s with Federal Agencies to facilitate the permitting process.
ANWR will again get attention with President Bush being elected to a second term and the success in the Senate and House. The Governor as President of IOGCC and Chairman of the National Governors Association, Committee on Resources, will be working on blending the effort of the two organizations and will lead an aggressive lobbying campaign for a National energy policy, the crown jewel being ANWR.
Mining
Alaska mining industry now has Red Dog, Greens Creek, Usibelli, Ft. Knox, and True North, a tremendous foundation to build on. Pogo is under construction, as well as major development projects on the horizon, such as Kensington, Donlin, Rock Creek, Pebble Gold and Copper, and Nixon Fork. Quoting Curt Freeman, an individual that I respect very much, “Mineral exploration and development is clipping along at a pace not seen in more than 5 years”.
During the last fiscal year, over 4,300 new state mining claims were located. Since July 1st, another 2,500 claims were located. This brings the total to over 6,800 claims and over 880,000 acres staked in the past 15 months.
I think a few comments need to be made on the last minute appeal filed by the Northern Alaska Environmental Center that stopped POGO construction and the corresponding successful withdrawal of the appeal. If there was any doubt that responsible resource development is welcome in Alaska, then that doubt should have been totally removed. Look at the company support from the Governor, the Governor’s Cabinet, Legislators, North Star Borough, City of Fairbanks, construction and mine workers, Alaska Miners Association, Resource Development Council, the community at large, and EPA. Where else in the world would mining get this kind of support? I thank Karl Hanneman, the company, and all who got involved. As many of you already know, after a lot of work and after several of us labored all night, a reasonable solution was reached that ended with the Environmental Center withdrawing its appeal and Pogo going back to work. Alaska supports resource development.
The President of Taiwan and the Governor recently signed the Alaska - Taiwan Business Agreement to work jointly in developing oil and gas, coal and metal mining, agriculture, fishing, timber, and tourism opportunities. One of the first areas of interest will be the coal fields in SE Alaska. The Taiwanese have formed their team and Alaska is in the process of forming its team.
Timber
Significant efforts by the Administration successfully saved the SE timber industry. Mills that were close to shutting down have been given a new life with critical timber sources. Work is continuing on revitalizing the Alaska Timber Industry.
Fishing
The Governor facilitated a $50 million fund for revitalization of the salmon industry and this is the first year in memory that the state hasn’t seen canned salmon carry over from previous years. I should mention that the United Fishermen of Alaska announced that Governor Murkowski was their selection as Political Man of the Year.
Land
Land rights are important to resource development.
The state has a priority in getting State lands in private Alaskan ownership. Each sale must comply with land use plans, public notice, competitive bids, platting board requirements, surveys, title searches, and best interest findings that take into account airports, resource potential, rivers, and wildlife. FY 04 Revenues for Land Sales was over $7.0 million – the highest in 15 years.
BLM 2009
The State of Alaska must resolve land ownership for Alaska Native Allottees, the Alaska Native Corporations, the State, Municipalities, Mental Health Land Trust, and the University of Alaska.
The Alaska Congressional Delegation understands the complex lands issues very well. Just yesterday it was announced that the House quickly passed Senator Murkowski’s Senate bill gaining approval for a law that accelerates the conveyance of pending state and Native corporation land claims by 2009.
Recordable Disclaimers For Beds Of Navigable Waters
DNR has now filed 13 applications for Recordable Disclaimers of Interest with the Bureau of Land Management. These 13 applications cover 31 water bodies. To date BLM has issued disclaimers for portions of the Black River and four of its tributaries, the Klutina River and Klutina Lake, and Kvichak Lake and Lake Iliamna. These are the FIRST three disclaimers in the nation. To give an idea of size, Lake Iliamna alone is 713,600 acres – larger than Rhode Island.
I want to make it clear that these disclaimers do not transfer any land to the State of Alaska that we don’t already own. This is simply an administrative process that allows BLM to formally disclaim any title interest in the beds of these state-owned navigable waters and clears the cloud on the state’s title.
I also particularly want to recognize Henry Bisson, State Director BLM, and his staff for their work on recordable disclaimers and support on other State issues.
RS 2477’s
We tried the recordable disclaimer process with RS 2477’s but were not successful. Consequently we have selected three test cases and DNR is working with the Attorney Generals office with the intent to file quiet title action in court to protect Alaska land rights. The three routes, which are in the vicinity of Coldfoot and Chandalar Lake, provide access to over one-and-a-half million acres of state owned land.
Fires:
6.4 million acres burned in the 2004 season. Of the 669 fires 410 were human caused and 259 were from lightning. First I want to thank all the firefighters, over 3000, for their excellent safety and work record. There were no serious accidents! Also the support from the National Guard and from communities within Alaska and outside was superb.
At the start of every fire a detailed plan is put together taking into account the weather, fuel sources, fire management area, manpower, cost alternatives etc. Often these plans are updated on a daily basis. After the fire season and when individuals have had a break (many worked all summer with only a couple of days off and then Alaska’s Type I team helped in Florida after the Alaska fire season work was complete) the Division of Forestry reviews each fire, what was done right, what should have been done different or better. The division then meets with BLM for an interagency review. This year the review is reaching out to communities so that all can be informed and better prepared in the future.
Alaska has some major decisions to make about future fires. For a good background I would recommend “FIRE IN ALASKA” A History of Organized Fire Suppression and Management in the Last Frontier by Holly Ann Jewkes, M.S. and Susan K. Todd, PhD, Agricultural and Forestry Experiment Station Bulletin University of Alaska, Fairbanks July 2004.
Land sales and development are facilitating more homes, cabins, subdivisions, and businesses further into the remote areas of Alaska. Drier climates, significant lightning strikes, response times, limited-modified-full protection issues, and costs require continual review of the approach to fires from the extreme of putting all fires out, with resulting increases in fuel sources, to letting all fires burn. The Administration is reviewing all fire policies again this year. Also every Alaskan should learn all they can about the Fire Wise program.
In closing I am encouraged by what has been accomplished, but we are not done. I am excited by what we can accomplish together in the future. I would like to stress it is not Government and Business, we and them. It is we together and we will meet the challenges together.
Alaska is the best location in the world for resource development and I encourage you to take advantage of this opportunity. Thank you.
