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