JUNEAU, Alaska—With the the 30-thousand-dollar-a-day legislative session still in limbo, committee hearings were held.
Though no laws can be passed, now that the Senate has adjourned, two Senate Committees did examine two important issues: the high cost of energy in our state, and a controversial agreement to develop the oil and gas field at Point Thomson.
Senate Finance Committee voted to spend $150,000 to study the issue.
No action can be taken before the 28th Legislature convenes next January, but lawmakers said it was a start.
Alaskans are the highest energy consumers per capita of any state in the union. And spending for energy takes a disproportionate amount of money out of our wallets.
Then, later in the day, bombshell testimony on Point Thomson.
Mark Myers, the former head of Alaska's Division of Oil and Gas, told the Senate Judiciary Committee that he would not have signed the Governor's Point Thomson agreement. Myers thinks it's a bad deal from the state.
Myers, who holds a Ph. D. in geology, says there are too many loopholes in the agreement. He claimed those loopholes make the state vulnerable to delayed development, and to wasteful development.
Myers called Point Thomson the "crown jewel" in the state's undeveloped oil fields. He says it could contain a billion recoverable barrels of oil, and 7-to-8 trillion cubic feet of natural gas.
But because the field is 60 miles east of Prudhoe Bay and has no connecting infrastructure, ExxonMobil has more or less sat on the lease for decades.
The state had been suing the company, trying to get them to develop their lease. But in late March, the Parnell Administration announced a new agreement with ExxonMobil and ConocoPhillips to develop the field.
It was that agreement that Meyers criticized today.
Myers said that, among other things, the new lease did not contain adequate protections against a phenomenon called, "Blow Down."
Blow Down can occur in high-pressure fields. And Point Thomson's oil and gas are trapped in rocks at unusually high pressures at about 10-thousand pounds per square inch. That's several times the pressure of a diver's scuba tank.
If high pressure fields are not developed properly, there's a huge risk that their full oil and gas potential might not be recovered.
Myers warned that the contract negotiated by the Parnell Administration does not provide enough assurance that the state of Alaska's interests will be protected.
He said that unless extremely expensive well-casings are used, casings that are 3 times more costly than conventional well cases, then oil and gas could come fizzing out of the Point Thomson fields at such high pressure, it risked leaving vast portions of the field untapped.
The phenomenon of letting runaway pressure pump your oil is called, as we mentioned, Blow Down. And it's analgous to popping the top on a shaken can of soda. Soda and gas come rushing out, but its wasteful.
According to Myers, the Parnell Administration contract weakens Alaska Department of Resources regulation of drilling techniques for Point Thomson. And it leaves the state vulnerable if an operator uses a cheap, quick method to recover oil and gas. The quick cheap method could leave vast portions of Point Thomson untapped and unavailable.
"Could you give us an estimate", Senator Bill Wielechowski (D-Anchorage) asked, "If Exxon were to choose the "blow down" method versus full-field cycling, how much that would *cost* the state of Alaska?
"60 million barrels of oil", Myers calculated out loud, "At say, subtract out transportation costs, a hundred dollars a barrel... What's that six billion dollars?
The members of the Judiciary Committee seemed astonished.
Later they heard testimony from Joh Balash, the Deputy Director of Alaska's Department of Natural Resources for the Parnell Administration. Balash assured senators that the state's interests had been protected in the contract.
He also told a Channel 2 interviewer, " It's very clear that the state law would dictate that those liquids be recovered." Balash wend on, "Certainly everything about this field is big, everything is complicated and everything is high-stakes, We are looking for the greatest recovery we can *get*.
The Parnell Administration also issued an e-mail reading, "The governor is confident this settlement will provide significant value to the state - both in production of resources and new economic opportunities." The Administration also says it has multiple layers of protection against Blow Down scenarios.
The governor's Point Thomson agreement is being disputed by Bill Walker of the Port Authority.
Walker wrote a letter to the DNR Commissioner alleging that the agreement was reached adequate public hearings or legislative oversight. The letter also contends that the agreement fails to provide adequate protection of Alaskans' interest.