Agency seeks funds to cover increased oilfield activity

Posted: Friday, January 18, 2002

JUNEAU (AP) -- Oil production is up, state officials say, but success comes with a price.

Mark Myers, director of the Division of Oil and Gas, told a legislative committee Thursday he needs $500,000 more next year, partly to hire staff to handle an increased workload.

Department of Natural Resources Commissioner Pat Pourchot told the House Special Committee on Oil and Gas that in the fiscal year that ended in June 2001, oil production rose for the first time in at least 10 years.

The increase was slight -- probably 30,000-40,000 barrels a day -- but it was good news after years of watching production drop in the giant Prudhoe Bay field, Pourchot said.

''Stopping decline is significant,'' Pourchot said.

The new production came from Alpine, North Star and other recently developed satellite fields on the North Slope, he said.

Along with new production, the Oil and Gas Division is seeing a jump in leasing activity, Myers said. The number of oil and gas leases sold nearly doubled from fiscal year 2000 to fiscal year 2001.

Myers said it's taking too long to issue leases -- on average a year from the time of the sale -- because the state doesn't have enough staff. That costs the state money.

''We essentially don't get rental income until we issue a lease,'' he said. That meant the state was a year late in receiving about $10 million last year, he said.

The division also hopes to add a reservoir engineer and a commercial pipeline analyst.

The number of pipelines is also rising as production spreads across the North Slope, and the state needs to have someone on staff to make sure it doesn't pay more tariff than necessary to move its share of the oil, Myers said.

One cent per barrel difference in tariffs on the trans-Alaska oil pipeline is worth $800,000 to the state, he said.

The division's funding is part of a $4.8 million package Gov. Tony Knowles is seeking to strengthen oversight of Alaska's oil facilities and streamline new oil and gas exploration.

The division made a successful pitch to the Legislature last year for extra money for better technology and staff pay increases so the state would better prepared to negotiate with the industry. Pourchot and Myers thanked legislators Thursday for that boost.

Committee Chairman Scott Ogan, R-Palmer, said it was the kind of spending he could support, despite his reputation as a budget hawk.

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