1997-04-14                     House Journal                      Page 1099
HB 250                                                                       
HOUSE BILL NO. 250 by the House Rules Committee by request of                  
the Governor, entitled:                                                        
                                                                               
An Act establishing a North Slope Gas Commercialization Team                  
to develop recommendations regarding a North Slope gas project;                
and providing for an effective date.                                           

1997-04-14                     House Journal                      Page 1100
HB 250                                                                       
was read the first time and referred to the House Special Committee            
on Oil & Gas and the Resources and Finance Committees.                         
                                                                               
The following fiscal note applies:                                             
                                                                               
Fiscal note, Dept. of Revenue, 4/14/97                                         
                                                                               
The Governor's transmittal letter, dated April 11, 1997, appears below:        
                                                                               
Dear Speaker Phillips:                                                         
                                                                               
Developing our enormous North Slope natural gas resources is a                 
significant opportunity  for creating Alaska jobs and providing a secure       
economic base upon which to build Alaskas future.  This bill I                 
transmit today establishes the North Slope Gas Commercialization               
Team to identify and develop steps  the state can take, in cooperation         
with the North Slope leaseholders and other potential sponsors, to             
make a North Slope gas project a reality.                                      
                                                                               
To date, the development of North Slope natural gas resources has not          
been economically feasible or competitive with alternative sources of          
energy.  North Slope leaseholders estimate a $15 billion cost for the          
facilities to develop these resources, including a gas conditioning plant,     
an 800-mile pipeline, a liquefaction plant to convert natural gas into         
liquefied natural gas (LNG), LNG storage facilities, and LNG tankers.          
                                                                               
There is relatively little the state can do to reduce the capital costs of     
a North Slope gas project.  There are steps the state can take to              
improve a projects economic feasibility and competitiveness.  The              
state has received guidance from a report commissioned by the                  
Department of Revenue.  This report reviews Alaskas tax and royalty            
structure, evaluates the competitiveness of the project internationally,       
and recommends in general terms possible modifications to the states           
tax and royalty structure to  improve the economic feasibility and             
competitiveness of a project.                                                  
                                                                               
The Administration also has received guidance from the legislature.            
In House Concurrent Resolution 1,  the legislature requested  the              
governor and North Slope gas resource leaseholders develop a contract          
to execute  with  sponsors of an  LNG project,  as well as  appropriate        

1997-04-14                     House Journal                      Page 1101
HB 250                                                                       
enabling legislation.  The contract and legislation would establish the        
nature, degree, and duration of the fiscal terms that would best               
facilitate a project.                                                          
                                                                               
                                                                               
This bill creates the administrative structure necessary to evaluate           
recommended changes to the tax and royalty system and carry out the            
wishes of the legislature as expressed in HCR 1.  The North Slope Gas          
Commercialization Team would determine how to improve the                      
economic feasibility and competitiveness of a North Slope gas project          
while protecting the public interest.   The team also could help develop       
legislation to enable the state to enter into the contract, provide a stable   
fiscal and regulatory structure for the project, aid permitting, ensure a      
maximum number of Alaska residents and Alaska businesses are hired             
to construct and operate the project, protect the environment, health          
and safety of workers and the public, and provide natural gas to Alaska        
communities.                                                                   
                                                                               
                                                                               
This bill is an important step forward in developing Alaskas North             
Slope natural gas resources.  I urge your prompt consideration and             
passage of this bill.                                                          
                                                                               
							Sincerely,                                                              
							/s/                                                                     
							Tony Knowles                                                            
							Governor