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

State of Alaska Division of Oil and Gas 2 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

State of Alaska Division of Oil and Gas 3 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-Petroleum 11% Petroleum 89% Total Royalties, Bonuses, Rents, Fees & Settlements: $2.3 Billion

State of Alaska Division of Oil and Gas 4 Millions of Barrels per Year

State of Alaska Division of Oil and Gas 5 ADNR –AS Management of legislatively designated state game refuges and critical habitat areas is the co-responsibility of ADF&G (AS ) and ADNR. Lessees are required to obtain permits from both ADNR and ADF&G. –AS 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 Provides for reservation of easements to ensure free access to navigable or public water.11 AAC Implementing regulations for the reserving of easements to ensure free access to navigable or public water. –11 AAC (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 Operations requiring permits, including the use of explosives and explosive devices, except firearms. –11 AAC 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 (a)(9)(C) Requires geological and geophysical data to be kept confidential upon request of supplier. –AS 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 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 Geophysical Exploration Permit provides controls over activities on state lands in order to minimize adverse activities ADNR/DL –AS Establishes leasing procedures under public auction, including tide and submerged lands, bidding qualifications, and competitive or non-competitive bidding methods –AS 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 Pipeline Right-of-way Leasing Regulations. –11 AAC –Requires a Water Rights Permit for the appropriation of state waters for beneficial uses. –11 AAC Land use permit activities not permitted by a multiple land use permit or lease operations approval. Authorities

State of Alaska Division of Oil and Gas 6 Authorities (short list) Title 38 – Oil And Gas Exploration License – Conversion To Lease – Leasing Generally; Payments And Interest – Shallow Natural Gas Leases – Oil and Gas Leasing 11 AAC ,.346 & –11 AAC &.346 Plans of Operations –11 AAC Geophysical Exploration Permits Best Interest Finding Mitigation Measures The lease

State of Alaska Division of Oil and Gas 7 Achievements in 2006 Leasing/Permitting Conducted five areawide lease sales in FY million acres leased, with 402 bids on 360 tracts, and 41 bidding groups participating Resulted $38.2 million in bonus bids

State of Alaska Division of Oil and Gas 8

ACMP Review Process in Oil and Gas world

State of Alaska Division of Oil and Gas 10 Typical A List Activities: On-pad civil works

State of Alaska Division of Oil and Gas 11 Electrical Skid on Pad

State of Alaska Division of Oil and Gas 12 VSM (Vertical Support Member)

State of Alaska Division of Oil and Gas 13 Typical B List Activities Typically routine off-pad activities Foreseeable disturbance to tundra

State of Alaska Division of Oil and Gas 14 Off-pad Snowfence PBU S Pad

State of Alaska Division of Oil and Gas 15 Onshore off-pad Pipeline Construction (construction of new pipeline on new VSMs)

State of Alaska Division of Oil and Gas 16 This is HIS ground! Palm Bridge Crossing

State of Alaska Division of Oil and Gas 17 Alpine Airstrip

State of Alaska Division of Oil and Gas 18 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)

State of Alaska Division of Oil and Gas 19 Gas Processing Facility Ninilchik Unit…

State of Alaska Division of Oil and Gas 20 Gas Processing Facility-- Prudhoe Bay Unit

State of Alaska Division of Oil and Gas 21 Tarn Drill Site (KRU)

State of Alaska Division of Oil and Gas 22 Alpine CD 3 Construction Winter of 05

State of Alaska Division of Oil and Gas 23 Onshore Ice Pad Exploration NS

State of Alaska Division of Oil and Gas 24 Offshore Shallow Water Exploration

State of Alaska Division of Oil and Gas 25 Geophysical Exploration Permit

State of Alaska Division of Oil and Gas Oil & Gas Permitting Process Most work: –Exploration licenses, –Lease sales, –Plans of Operation Linking of BIF and ACMP review

State of Alaska Division of Oil and Gas 27

State of Alaska Division of Oil and Gas 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

State of Alaska Division of Oil and Gas Mitigation Measures AS (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.

State of Alaska Division of Oil and Gas 30 Single Agency vs. OPMP Coordinated Review DOG performs single agency review where DOG approval is only state agency authorization necessary other than DEC permits

State of Alaska Division of Oil and Gas 31 Plan of Operations ( 11 AAC /.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

State of Alaska Division of Oil and Gas 32 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)

State of Alaska Division of Oil and Gas 33 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

State of Alaska Division of Oil and Gas 34 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