Lawmakers balk at confidentiality clause for report

Posted: Wednesday, January 19, 2005

State lawmakers representing the Kenai Peninsula currently are split over whether they'll sign a confidentiality agreement promising not to make public the contents of a consultant's report that measures Alaska's competitiveness in the world oil and gas market.

The Legislature, through the Legislative Budget and Audit Committee, paid $50,000 for the report written by the Edinburgh, England-based firm Wood Mackenzie Consultants Ltd., which considers the information proprietary and available only to buying clients.

According to the company Web site, the study, entitled "Global Oil and Gas — Risks and Rewards 2004," compares the exploration and appraisal (E&A) economics of oil and gas exploration in more than 60 countries and regions, including Alaska.

For instance, it covers details about exploratory drilling between 1994 and 2003, commercial and technical success rates and assorted costs. For each field developed between 1994 and 2003, or planned over the next few years, the study lists capital and operating costs, net present value and internal rate of return statistics, and average government take (including royalties, taxes and other revenue streams).

The company's September 2004 energy newsletter notes that the key challenge facing energy companies is identifying where they can make the best return on investments.

"Similarly, governments face challenges in balancing a desire to maximize upstream revenues through taxation, with the maintenance of a competitive environment to encourage activity," Wood Mackenzie said.

The information in the competitiveness study could prove of value to lawmakers in making oil and gas policy decisions. However, some, including a few from the Kenai Peninsula, have expressed concern about being required to keep the information secret from the public — something Wood Mackenzie insists on because the company also sells its analysis to other clients.

"I haven't decided whether to sign it yet," Rep. Mike Chenault, R-Nikiski, said Monday. Chen-ault is a member of the Legislative Budget and Audit Committee, which voted to buy the study.

"At that time, I don't know if anyone knew what strings were attached," he said, adding that today he feels that if the Legislature buys the study, lawmakers ought to be able to use it in any form they want.

"But (the consultants) sell it to anyone who wants to spend $50,000 to buy it," Chenault said. "If I sign the agreement and find information I want to use, say in a presentation, how do I do that without getting into a bind?"

Sen. Tom Wagoner, R-Kenai, also said he wasn't sure if he'd sign the confidentiality agreement. But he also said it likely doesn't include any new revelations. The basics already are known — that Alaska isn't that competitive for an obvious reason.

"It is very expensive to operate on the North Slope" and other parts of Alaska, Wagoner said.

Sen. Gary Stevens, R-Kodiak, acknowledged Friday he wasn't familiar with the issue.

"However, I'm not interested in signing confidentiality documents," he said. "What I know should be available to the public."

On the other hand, Rep. Paul Seaton, R-Homer, said Friday he would sign the agreement.

"I have read a draft of the confidentiality statement and have no problem with it," he said. "I believe it is a normal precaution of trade secret-type analysis. The Legislature is just one of several companies who are buying this analysis. If we attempted to be a sole purchaser so we could release the information, it would be hugely expensive because it would make the product not sellable as proprietary information to other companies. I look forward to being able to review the study in about a week."

Chenault said he didn't know if the $50,000 price tag for the study represented a good expenditure of public dollars.

"If it enlightens the Legislature about how the oil industry conducts business, then I think it is worthwhile," he said. "Personally, I'd like it out in the open so people can look at it, instead of us just telling them we have good information but that we can't let them have it."

As to confidentiality agreements in general, Chenault said state lawmakers deal with that sort of thing all the time.

"It is not uncommon that we would sign confidentiality agreements," he said.

Chenault said he did not recall whether the committee had considered buying studies from any American competitors to Wood Mackenzie.

Rep. Kurt Olson, R-Soldotna, could not be reached for comment.

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