00 HOUSE CONCURRENT RESOLUTION NO. 12 01 Requesting that the governor and the attorney general review and reevaluate the license 02 issued to TransCanada Alaska Company, LLC, and Foothills Pipe Lines Ltd., jointly as 03 licensee, under the Alaska Gasline Inducement Act to determine whether the project 04 proposed by the licensee sufficiently maximizes the benefits to the people of the state and 05 merits continuing the license, taking into consideration economic changes affecting 06 project financing, the availability of liquefied natural gas and natural gas from 07 nonconventional sources, the state's risk of paying treble damages associated with an in- 08 state gas pipeline, and the expected budget deficit; and requesting that the governor and 09 the attorney general report the outcome of the review and reevaluation within six 10 months. 11 BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF ALASKA: 12 WHEREAS the state of the national and global economy has been officially declared 13 a "recession," and current energy markets and credit markets are in turmoil, thereby creating 01 new uncertainties for the economic feasibility of the large diameter gas pipeline contemplated 02 by the licensee under AS 43.90 (Alaska Gasline Inducement Act) as well as the ability of the 03 licensee to finance the construction; and 04 WHEREAS aggressive developments of shale and other nonconventional gas 05 resources in the Lower 48, such as the Barnett shale formation in Texas, thought to be the 06 largest onshore natural gas field in the United States, with some experts estimating that it 07 contains up to 30 trillion cubic feet of gas, and the Bakken shale formation of the Williston 08 Basin Province, Montana and North Dakota, which is thought to contain 1.85 trillion cubic 09 feet of associated/dissolved natural gas, and 148,000,000 barrels of natural gas liquids, have 10 brought substantial new domestic natural gas production to market; and 11 WHEREAS technological advancements in the field of shale gas recovery have called 12 into question the economic viability of a long distance, large diameter pipeline; and 13 WHEREAS shale gas in the continental United States is closer to large markets and 14 already enjoys thousands of miles of pipe and transmission lines where the construction of 15 risk and cost have already been mitigated; and 16 WHEREAS there are surplus receiver ports for liquefied natural gas along the coasts 17 of the United States that are vastly underutilized and have altered the fundamentals of the 18 domestic natural gas market; and  19 WHEREAS the commissioner of revenue and the commissioner of natural resources, 20 acting jointly, determined that the joint application of TransCanada Alaska Company, LLC, 21 and Foothills Pipe Lines Ltd. proposed a natural gas pipeline project that will sufficiently 22 maximize the benefits to the people of the state and merits issuance of a license under 23 AS 43.90 (Alaska Gasline Inducement Act); and 24 WHEREAS the commissioner of revenue and the commissioner of natural resources, 25 acting jointly, published a notice of intent to issue a license to TransCanada Alaska Company, 26 LLC, and Foothills Pipe Lines Ltd., jointly, under AS 43.90 (Alaska Gasline Inducement Act) 27 and forwarded the published notice along with the findings, supporting documentation, and 28 determination to the presiding officer of each house of the Alaska State Legislature; and 29 WHEREAS the Alaska State Legislature approved the issuance of the license to 30 TransCanada Alaska Company, LLC, and Foothills Pipe Lines Ltd., jointly as licensee, by 31 passing HB 3001 during the Fourth Special Session of the Twenty-Fifth Alaska State 01 Legislature; and 02 WHEREAS the commissioner of revenue and the commissioner of natural resources, 03 acting jointly, have issued the license approved by the Alaska State Legislature; and 04 WHEREAS AS 43.90.440 entitles TransCanada Alaska Company, LLC, and 05 Foothills Pipe Lines Ltd., jointly as licensee, to a payment from the state of an amount equal 06 to three times the total amount of the expenditures incurred and paid by the licensee that are 07 qualified expenditures for the purposes of AS 43.90.110 that the licensee incurred in 08 developing the licensee's project if, before the commencement of commercial operations, 09 (1) the state extends to another person preferential royalty or tax treatment or 10 grant of state money for the purpose of facilitating the construction of a competing natural gas 11 pipeline project in this state; and 12 (2) the licensee is in compliance with the requirements of the license and with 13 the requirements of state and federal statutes and regulations relevant to the project; and 14 WHEREAS the people of the state have a present need for natural gas produced from 15 the North Slope, and it is in the best interests of the state to pursue a means for delivering 16 natural gas produced from the North Slope to the people of the state before the 17 commencement of commercial operations of the project proposed by TransCanada Alaska 18 Company, LLC, and Foothills Pipe Lines Ltd., jointly as licensee; and 19 WHEREAS the development of a project for the delivery of natural gas from the 20 North Slope before the commencement of commercial operations of the project proposed by 21 TransCanada Alaska Company, LLC, and Foothills Pipe Lines Ltd., jointly as licensee, may 22 require the state to extend to another person preferential royalty or tax treatment or grant of 23 state money for the purpose of facilitating the construction of a natural gas pipeline; and 24 WHEREAS current revenue projections for Alaska indicate that Alaskans will be 25 facing a budget deficit in the years ahead, further jeopardizing the state's ability to pay treble 26 damages to the licensee should the state become liable to the licensee for violating the 27 assurance to the licensee in AS 43.90.440; and 28 WHEREAS the licensee's ongoing work, including field work, continues to increase 29 the state's liability for reimbursing the licensee; and 30 WHEREAS a project other than the project proposed by TransCanada Alaska 31 Company, LLC, and Foothills Pipe Lines Ltd., jointly as licensee, that receives preferential 01 royalty or tax treatment or a grant of state money may be considered a competing natural gas 02 pipeline project to the project pursued under the license issued to TransCanada Alaska 03 Company, LLC, and Foothills Pipe Lines Ltd., jointly as licensee; and 04 WHEREAS it is in the best interest of the state that the state have maximum 05 flexibility to take any action necessary to develop its natural gas and to meet the energy needs 06 of the people of the state; and 07 WHEREAS the entitlement of TransCanada Alaska Company, LLC, and Foothills 08 Pipe Lines Ltd., jointly as licensee, to a payment by the state of an amount equal to three 09 times the total amount of certain qualified expenditures incurred and paid by the licensee 10 handicaps the state from pursuing all reasonable alternatives for the development of a project 11 to deliver natural gas from the North Slope to the people of the state or for export from the 12 state for the benefit of the people of the state; and 13 WHEREAS it is in the best interest of the state to eliminate the risk of a payment of 14 an amount equal to three times the total amount of certain qualified expenditures incurred and 15 paid by the licensee so that the state may pursue all reasonable means for the development of 16 the state's natural gas and to meet the energy needs of the people of the state; and 17 WHEREAS the dilemma for Alaska is whether or not a large diameter gas pipeline 18 into a North American hub market is commercially viable; and 19 WHEREAS it is unclear if there is a value for the state to spend up to $500,000,000 to 20 create competition when it is uncertain, even if there are two or more competing projects, 21 whether or not those projects will ultimately be commercially viable; 22 BE IT RESOLVED that the Alaska State Legislature requests that the governor and 23 the attorney general review and reevaluate the license issued to TransCanada Alaska 24 Company, LLC, and Foothills Pipe Lines Ltd., jointly as licensee, under AS 43.90 (Alaska 25 Gasline Inducement Act) to determine whether the project proposed by the licensee 26 sufficiently maximizes the benefits to the people of the state and merits continuing the license, 27 taking into consideration economic changes affecting project financing, the availability of 28 liquefied natural gas and natural gas from nonconventional sources, the state's risk of paying 29 treble damages associated with an in-state gas pipeline, and the expected budget deficit; and 30 be it 31 FURTHER RESOLVED that the governor and the attorney general are requested to 01 report the outcome of their review and evaluation within 180 days after this resolution is 02 passed by the legislature.