Legislature(2009 - 2010)BARNES 124

03/01/2010 03:15 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 253 MECHANIC/MATERIALMEN LIENS TELECONFERENCED
Moved Out of Committee
*+ HB 282 NATUROPATHS TELECONFERENCED
Heard & Held
*+ HB 287 UNIFORM ACT: PROPERTY INTEREST DISCLAIMER TELECONFERENCED
Moved Out of Committee
+= HCR 19 AIDEA REPORT ON IN-STATE FUEL STORAGE TELECONFERENCED
Moved Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
          HCR 19-AIDEA REPORT ON IN-STATE FUEL STORAGE                                                                      
                                                                                                                                
3:26:53 PM                                                                                                                    
                                                                                                                                
Chair Olson announced  that the first order of  business would be                                                               
HOUSE CONCURRENT RESOLUTION NO.  19, Urging the Alaska Industrial                                                               
Development and  Export Authority to  present a business  case to                                                               
the  Alaska   State  Legislature  that  includes   a  method  for                                                               
financing, a plan  to solicit proposals for a  public and private                                                               
venture, and an analysis of  the economic feasibility of a state-                                                               
built  and privately  operated fuel  storage facility  that would                                                               
serve the public  interest by providing Alaskans  with a reliable                                                               
source of jet fuel, diesel, and gasoline at competitive prices.                                                                 
                                                                                                                                
3:26:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JAY RAMRAS, Alaska  State Legislature, speaking as                                                               
the  prime sponsor,  related that  Mr. Leonard  advises that  the                                                               
Alaska  Industrial Development  and Export  Authority (AIDEA)  is                                                               
viewed  as a  project component,  but  is acting  in an  advisory                                                               
capacity  and as  a  consultant for  the  proposed resolution  he                                                               
sponsored.  If  the business case that is  developed supports the                                                               
project moving forward, the AIDEA  would transition to a de facto                                                               
proponent as  a potential owner  of the asset, seeking  an entity                                                               
to operate the proposed "tank farm."   In the event that the free                                                               
market works, that the storage  is developed, and refineries drop                                                               
prices, the  third party  could cover  their costs  and reimburse                                                               
AIDEA.   Mr.  Hemsath and  Ted  Leonard are  available to  answer                                                               
questions on behalf of AIDEA.                                                                                                   
                                                                                                                                
REPRESENTATIVE  RAMRAS  related  that  a  question  arose  as  to                                                               
whether the proposed  expansion of the Port of  Anchorage, or the                                                               
"tank  farm" would  compete with  the  North Pole  refinery.   He                                                               
stated  that the  proposed tank  storage is  not a  refinery.   A                                                               
simple  answer  is that  the  only  thing  that competes  with  a                                                               
refinery  is  a refinery.    AIDEA  is  being  asked to  build  a                                                               
business  case for  a  fee market  alternative  to price  gouging                                                               
legislation that  would benefit consumers  and offer a  return to                                                               
AIDEA  if they  participate in  building a  business case.   This                                                               
resolution does not  lead to a funding request  or financing, but                                                               
just to construct a business case.                                                                                              
                                                                                                                                
3:29:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  BUCH  asked for  the  inception  of the  proposed                                                               
project resolution.                                                                                                             
                                                                                                                                
REPRESENTATIVE  RAMRAS  responded  that  the  timeframe  for  the                                                               
project  is  unknown  since  AIDEA's role  is  to  determine  the                                                               
viability of  the project.   Several years  ago the  answer would                                                               
have been  that the project is  not viable since the  storage was                                                               
not  available.   He  elaborated  that if  the  business case  is                                                               
strong, and  the Port of  Anchorage is ready, that  the tentative                                                               
timetable would  include bonding  in 2011, construction  in 2012,                                                               
and operational  in 2013.   He stated the timeframe  is currently                                                               
undefined.                                                                                                                      
                                                                                                                                
3:31:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN assumed that  the intent of this resolution                                                               
is to  take advantage  of the free  enterprise to  create storage                                                               
facilities.                                                                                                                     
                                                                                                                                
REPRESENTATIVE RAMRAS  answered yes.  Two  refineries, the Tesoro                                                               
Nikiski  Refinery  that  produces  85  percent  of  the  gasoline                                                               
consumed in the state, and  Flint Hills Resources Refinery (Flint                                                               
Hills) that  produces 15 percent  of the  gasoline.  Most  of the                                                               
jet aviation fuel has been  produced at Flint Hills Refinery, but                                                               
due to the recession and a  slowdown in demand at the Ted Stevens                                                               
International Airport, Flint  Hills closed one of  its towers and                                                               
at  certain times  an  inadequate  supply of  jet  fuel has  been                                                               
available.   Some air flights  have bypassed the airport  or have                                                               
had to pay a premium price on the  spot market for jet fuel.  The                                                               
same  thing  is  true  for low-sulphur  diesel,  which  is  being                                                               
produced  at the  Petro Star  Refinery in  Valdez, but  not being                                                               
produced at its North Pole Refinery.   Flint Hills may or may not                                                               
be in business  in the next few years due  to concerns previously                                                               
expressed.   Consumers  do  not  want to  spend  $.90 per  gallon                                                               
higher  than the  "rack  fuel" price.   That  is  the reason  for                                                               
competition, and if the case can  be made to offer liquid storage                                                               
it  would   be  preferable   to  him   over  the   price  gouging                                                               
legislation, which is not moving.                                                                                               
                                                                                                                                
CHAIR  OLSON agreed  that the  price gouging  legislation is  not                                                               
moving.                                                                                                                         
                                                                                                                                
3:34:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN recalled  that the  United Parcel  Service                                                               
(UPS) also brought in a barge load of fuel.                                                                                     
                                                                                                                                
REPRESENTATIVE RAMRAS stated he was unsure.                                                                                     
                                                                                                                                
3:35:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN  confirmed that  UPS  brought  up fuel  to                                                               
assist with the aviation fuel shortage.                                                                                         
                                                                                                                                
REPRESENTATIVE RAMRAS agreed.                                                                                                   
                                                                                                                                
REPRESENTATIVE NEUMAN stated  that UPS was trying  to address the                                                               
concern of inadequate  supplies of fuel.  He thought  it would be                                                               
good in the  future to ask AIDEA to also  consider Gas to Liquids                                                               
(GTL), which could happen in the future.                                                                                        
                                                                                                                                
3:35:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS remarked that he shares that conviction.                                                                  
                                                                                                                                
3:36:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE T. WILSON wondered  if the legislature should wait                                                               
for the private sector to address the issue of gas shortage.                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS answered  that the purpose is  to attract a                                                               
private  sector to  be the  lessee, with  AIDEA as  the potential                                                               
lessor.   He inquired  as to  whether she  was asking  whether an                                                               
entity  would be  willing to  make $100  million investment  in a                                                               
"tank farm."   He stated  that the  answer would likely  be borne                                                               
out during  the AIDEA process, with  AIDEA possibly participating                                                               
as  a  lender.   The  idea  is to  bring  relief  to the  Alaskan                                                               
consumers and honor the mission statement of AIDEA.                                                                             
                                                                                                                                
REPRESENTATIVE T.  WILSON related that AIDEA's  mission specifies                                                               
that is not to compete with the private sector.                                                                                 
                                                                                                                                
REPRESENTATIVE  RAMRAS  suggested if  the  AIDEA  was building  a                                                               
business case to build a  competing refinery, he would agree with                                                               
her.   However,  this  resolution  is for  tank  storage and  the                                                               
refineries  can  participate  as  tenants of  the  tank  storage.                                                               
AIDEA  finances  hotels, too.    He  disclosed  that he  holds  a                                                               
relationship with AIDEA  in that regard.  He  recalled that AIDEA                                                               
testified  that it  is to  abide by  own mission  statement.   He                                                               
acknowledged that he views this differently.                                                                                    
                                                                                                                                
3:38:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE T. WILSON  posed a scenario in  which the proposed                                                               
project is  built.  If  so, outside firms would  provide gasoline                                                               
or jet  fuel, but would  not pay the  costs Flint Hills  must pay                                                               
since it does  not have natural gas to use  as an operating fuel.                                                               
She  suggested that  the  outcome would  result  in cheaper  fuel                                                               
until facilities  such as  Flint Hills are  put out  of business.                                                               
She asked what would happen to prices.                                                                                          
                                                                                                                                
REPRENTATIVE  RAMRAS  responded  that  he  is  not  dealing  with                                                               
hypothetical  situations,  but  wants   to  address  a  statewide                                                               
perspective.  He stated  that he is not "a big  fan of the price-                                                               
gouging legislation"  that has moved through  the legislature for                                                               
the past 18  months.  He stated that allowing  the free market to                                                               
work can create an alternative  to refineries that brings a lower                                                               
cost  fuel into  Alaska.   The  free market  can punish  in-state                                                               
businesses, but we will not know  that until the business case is                                                               
made.   He stated that  he is  not talking about  the traditional                                                               
spread  of fuel  in Alaska  which ranged  from $.10  to $.20  per                                                               
gallon,  but  a  $.90  per gallon  price  disparity  in  gasoline                                                               
prices.   He  emphasized the  importance of  this legislature  to                                                               
demonstrate elasticity to consider a  business case.  He restated                                                               
that this  is not a funding  request, just a request  to consider                                                               
whether the "tank farm" storage is worthwhile.                                                                                  
                                                                                                                                
3:40:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CHENAULT commented that  Tesoro spent $100 million                                                               
on low-sulphur fuel  so most of the low-sulphur  fuel is produced                                                               
at the Tesoro Refinery.                                                                                                         
                                                                                                                                
REPRESENTATIVE RAMRAS stated that he stands corrected.                                                                          
                                                                                                                                
REPRESENTATIVE CHENAULT  asked whether AIDEA  is given a  date to                                                               
respond.                                                                                                                        
                                                                                                                                
REPRESENTATIVE RAMRAS  deferred to Ted Leonard,  AIDEA, to answer                                                               
questions.                                                                                                                      
                                                                                                                                
3:41:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  shared his  concern about gas  supplies in                                                               
Alaska.    Certainly no  one  wants  Flint  Hills to  shut  down,                                                               
leaving only  one refinery to  provide for Alaska's needs  and to                                                               
protect  our  military bases  and  missile  defense system.    He                                                               
characterized that as  a critical issue.  He  surmised that would                                                               
be  a  huge catastrophe.    Alaska  needs storage  facilities  to                                                               
provide  for  Alaska's  needs  if something  were  to  happen  to                                                               
Alaska's refineries.                                                                                                            
                                                                                                                                
REPRESENTATIVE RAMRAS shared his concern.   He related that Flint                                                               
Hill's  management  indicated  to  the  legislature  on  numerous                                                               
occasions  that   its  refinery  business  is   in  a  precarious                                                               
position.   He surmised  that it  could close  its plant  with 30                                                               
days  notice.   The  Ted Stevens  International  Airport and  the                                                               
military network  is critical the  state's economy.  It  would be                                                               
helpful for the  state to develop a contingency plan.   He stated                                                               
that  he  was  raised  in  Fairbanks and  has  been  involved  in                                                               
discussions with Flint Hills.   He offered his belief that Alaska                                                               
will be lucky  if Flint Hills is  in business in 1,000  days.  He                                                               
emphasized   the  importance   of  the   state  in   preparing  a                                                               
contingency  plan.     He  acknowledged   that  Flint   Hills  is                                                               
efficient, but did not think it  has made long term decisions and                                                               
commitments to the  state.  He related that he  is an advocate of                                                               
Flint Hills, and  has toured the plant as well  as well as others                                                               
including  the   Tesoro  Nikiski  plant.     He  highlighted  the                                                               
precarious infrastructure of the industry.                                                                                      
                                                                                                                                
3:45:20 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON remarked that AIDEA  envisioned that anyone could use                                                               
the facility.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  RAMRAS   agreed.     He  elaborated   that  large                                                               
retailers,  including  Fred Meyer,  and  Costco  and others  with                                                               
unbranded gasoline  could benefit.   He  surmised that  the rural                                                               
areas of the state would  potentially benefit.  The international                                                               
airport  system must  be  competitive  so it  does  not lose  jet                                                               
service.   He said, "Again, I  just come back to  the notion that                                                               
it  probably is  in  our  best interest  to  at  least visit  and                                                               
develop a  contingency plan, and  build a  business case.   It is                                                               
not a  funding request for AIDEA.   That's a battle  to be fought                                                               
later, but it is an opportunity to develop a business case."                                                                    
                                                                                                                                
3:46:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE T.  WILSON asked  whether Flint  Hills may  or may                                                               
not have the ability to make more fuel.                                                                                         
                                                                                                                                
JEFF  COOK, Director,  External  Affairs,  Flint Hills  Resources                                                               
Refinery (Flint  Hills), stated that  currently the  "crude three                                                               
unit" is  down.  He  asked to clarify some  of the comments.   He                                                               
said, "We  have met all  the contractual obligations we  have for                                                               
jet fuel at  the Ted Stevens Anchorage  International Airport and                                                               
actually have  gone beyond  that."  He  related that  Flint Hills                                                               
brought up  a barge load  of fuel at  Thanksgiving to help.   The                                                               
issue resulted  as the airlines  must nominate the jet  fuel, and                                                               
the  estimates were  off, and  they did  not nominate  enough jet                                                               
fuel.   The  Flint Hills  refinery  did not  want to  tie up  its                                                               
working capital  by storing fuel without  the demand for it.   He                                                               
stated that 23,000 barrels of jet  fuel was made today, and Flint                                                               
Hills  could  make 40,000  barrels  per  day  if necessary.    He                                                               
related  that as  the  economy  picks up,  that  Flint Hills  can                                                               
provide more.   He  offered that crude  prices have  helped, that                                                               
Flint Hills hired  six people in the past month,  and it plans on                                                               
a  $12  million   turnaround  beginning  April  27,   2010.    He                                                               
emphasized the  Flint Hills does  want a long term  presence, but                                                               
obviously having  a cheaper fuel such  as natural gas would  be a                                                               
benefit.  He said:                                                                                                              
                                                                                                                                
     No matter  what happens,  we've got 720,000  barrels of                                                                    
     storage at the Port of  Anchorage.  That's not going to                                                                    
     go away.  That's going to  be available whether it is a                                                                    
     Delta  Western,  a  Crowley,   or  some  other  private                                                                    
     enterprise that  if the advantage and  the necessity is                                                                    
     there, they can  go out and have the ability  to do the                                                                    
     business case.                                                                                                             
                                                                                                                                
3:49:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  T. WILSON  asked what  impact that  HCR 19  would                                                               
have on his business.                                                                                                           
                                                                                                                                
MR. COOK  answered that he was  unsure of the impact.   He stated                                                               
that if  it is not  fully amortized and  not fully operated  on a                                                               
business basis, it could have an  advantage.  However, it is hard                                                               
to tell.   He  stressed that if  a business case  is to  be made,                                                               
there are numerous companies that have the ability to make it.                                                                  
                                                                                                                                
CHAIR  OLSON asked  whether Flint  Hills  would use  the Port  of                                                               
Anchorage facility if it was built.                                                                                             
                                                                                                                                
MR. COOK related that Flint  Hills already has 720,000 barrels of                                                               
storage in Anchorage,  a similar amount in Fairbanks,  as well as                                                               
some rolling cars with the  Alaska Railroad Corporation so he did                                                               
not see the need in near future to use the facility.                                                                            
                                                                                                                                
3:50:39 PM                                                                                                                    
                                                                                                                                
KIRK  PAYNE,  Vice  President  of  Supply  and  Logistics,  Delta                                                               
Western, Inc.  (Delta Western), explained that  Delta Western has                                                               
been serving Alaska for over  25 years, delivering fuel to places                                                               
between  Kivalina  and  Ketchikan,  which  places  them  in  many                                                               
communities  throughout Alaska.    He stated  that although  some                                                               
fingers have been pointed at  them, they have had the opportunity                                                               
to work  with the legislature  to improve the process.   Recently                                                               
AIDEA and  the administration  asked Delta  Western to  develop a                                                               
white  paper on  the process.   The  framework was  based on  the                                                               
Attorney  General's 2008  Alaska Gasoline  Pricing Investigation.                                                               
The  structural characteristics  of  Alaska's petroleum  products                                                               
market  contributed  to  unusually  high  prices.    Thus,  Delta                                                               
Western considered ways  to fix the problem.  He  offered that in                                                               
reviewing historical prices, the  supply and demand for petroleum                                                               
productions was basically balanced.                                                                                             
                                                                                                                                
MR.  PAYNE  stated that  in  2006,  the Environmental  Protection                                                               
Agency  (EPA)  mandated  a shift  to  lower-sulfur  fuels,  which                                                               
resulted in an imbalance in supply  and demand.  It resulted in a                                                               
reduction   in   state    petroleum   production,   clean   fuels                                                               
essentially.   The question is how  to fill the gap.   Currently,                                                               
the  infrastructure is  lacking to  bring  in fuel,  or to  store                                                               
fuel,  or for  refiners to  sell at  off-season demand,  in which                                                               
Delta Western would  buy when refineries are not  running at peak                                                               
demand.   Thus, the idea  was to  build storage, find  someone to                                                               
lease it,  obtain some  market participants  to store  product in                                                               
the  storage  facilities.    Delta  Western  believes  that  this                                                               
approach,  sponsored by  AIDEA,  will help  solve  some of  these                                                               
issues.   The project  provides the ability  to buy  product from                                                               
refineries at  off-peak seasons.   He urged  members to  pass the                                                               
resolution since  it is  just a  study.  If  it makes  sense, the                                                               
legislature  can discuss  whether  to fund  the  facilities.   He                                                               
said, "I  believe that  this is  a viable solution  for a  lot of                                                               
Alaskans, a  lot of Alaskan  businesses, as well  as communities.                                                               
We're finding  it harder  and harder to  buy in  state production                                                               
and  that  doesn't  bode  well for  local  businesses  and  local                                                               
communities."                                                                                                                   
                                                                                                                                
3:54:22 PM                                                                                                                    
                                                                                                                                
JIM  HEMSATH, Deputy  Director -  Development, Alaska  Industrial                                                               
Development &  Export Authority (AIDEA), recalled  a comment made                                                               
by  Representative  T.  Wilson,  with  respect  to  awaiting  the                                                               
private sector to build this project.   He suggested that she has                                                               
identified an  important question.   Private industries,  such as                                                               
Costco or Safeway,  have not proceeded with  this project because                                                               
they do not view the value  for their companies.  The AIDEA study                                                               
can demonstrate the business case  for the private sector.  Thus,                                                               
AIDEA can demonstrate  to industry the opportunities  for them to                                                               
be  involved.   Perhaps someone  would become  a consolidator  of                                                               
fuel needs, if any exist.  The  point of the proposed study is to                                                               
examine  the  questions, identify  the  facts,  fiction, and  the                                                               
overall fuel  system.   The process of  making the  business case                                                               
would create  a total  picture for  the legislature  to formulate                                                               
its decisions.                                                                                                                  
                                                                                                                                
3:56:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  T.  WILSON  referred  to  a  page  in  the  AIDEA                                                               
handout,  titled "AIDEA's  Role,"  which states  that AIDEA  will                                                               
present  a business  case to  the Alaska  State Legislature  that                                                               
includes a method  for financing a plan to  solicit proposals for                                                               
a public  and private  venture.  She  asked whether  the proposed                                                               
project would  be completed  only with  public funding,  and that                                                               
more favorable financing would be available with public funding.                                                                
                                                                                                                                
MR. HEMSATH  said he thought  his answer  is yes.   He elaborated                                                               
that  part  of  the  business   case  is  to  explore  costs  and                                                               
financing.   The AIDEA finances through  project ownership, which                                                               
is the development  project model.  One key in  an AIDEA model is                                                               
to  find  the operator  of  a  facility.   He  stated  that if  a                                                               
business  offered  to  invest  in  this  project  and  asked  for                                                               
financing, AIDEA would do so.                                                                                                   
                                                                                                                                
3:57:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  T. WILSON  recalled  that  Fairbanks Natural  Gas                                                               
asked  AIDEA  for help  in  trucking  in  the gas,  and  proposed                                                               
biomass projects in  other areas.  She did not  think those types                                                               
of projects would compete with  Alaskan businesses  She asked for                                                               
the reason  that AIDEA is placing  its efforts on a  project that                                                               
she believes competes with private  businesses instead of biomass                                                               
or other alternate energy projects.                                                                                             
                                                                                                                                
MR. HEMSATH offered  that the Fairbanks Natural Gas  LNG study is                                                               
similar  in that  the business  approached AIDEA  to explore  the                                                               
viability of owning  $250 million in facilities with  part of the                                                               
analysis including  discussions with Flint  Hills.  At  the time,                                                               
due  to the  crude oil  prices and  other factors,  no overriding                                                               
business case existed  to make that project viable.   At the time                                                               
the two  major natural gas  customers in the Fairbanks  area both                                                               
declined.  He related that in  the event that a business case was                                                               
made to  use willow, fish oil,  or other biomass products,  and a                                                               
business case  could be made  to build a biomass  facility, AIDEA                                                               
could be a  financier and could support the  project.  Similarly,                                                               
if natural gas were available  from a pipeline with the potential                                                               
for  a  GTL  storage  facility, AIDEA  could  also  consider  the                                                               
project.    He related  that  the  business  case must  be  made,                                                               
including that  revenues must be  sufficient to pay  AIDEA's cost                                                               
of debt  and cost  of service.   Thus,  AIDEA would  consider any                                                               
projects  that can  do so.   AIDEA's  primary goals  are economic                                                               
development, job  growth, job  retention, and  diversification in                                                               
the state.                                                                                                                      
                                                                                                                                
4:00:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE T. WILSON asked who will pay for this study.                                                                     
                                                                                                                                
MR. HEMSATH responded  that the preliminary study  will be funded                                                               
in  part by  the Department  of Law,  who is  financing Econ  One                                                               
through the  market analysis,  and AIDEA  would finance  the cost                                                               
estimate  by  the engineering  contractor.    Thus, the  proposed                                                               
project  will  be  an   internally-funded  feasibility  study  to                                                               
examine the viability of a potential project.                                                                                   
                                                                                                                                
MR. HEMSATH, in  response to Chair Olson  estimated the timeline,                                                               
including Econ One at approximately 30 days.                                                                                    
                                                                                                                                
4:01:51 PM                                                                                                                    
                                                                                                                                
TED LEONARD, Executive Director,  Alaska Industrial Development &                                                               
Export Authority (AIDEA), introduced himself.                                                                                   
                                                                                                                                
4:02:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN  asked   whether  a  Gas-to-Liquids  (GTL)                                                               
project would be beneficial and economical.                                                                                     
                                                                                                                                
MR. LEONARD answered that in the  event that an in state pipeline                                                               
is  built,  that  a  GTL  facility would  be  one  of  the  major                                                               
industrial  participants.     He  stated  that   AIDEA  would  be                                                               
available  to  provide  analysis  and  potential  funding  for  a                                                               
proposed GTL facility.                                                                                                          
                                                                                                                                
REPRESENTATIVE NEUMAN  asked whether  he could provide  a "10,000                                                               
foot view".                                                                                                                     
                                                                                                                                
4:03:48 PM                                                                                                                    
                                                                                                                                
MR. HEMSATH responded  that he was uncertain.   The current study                                                               
provides that Econ  One is analyzing the need and  demand for jet                                                               
fuel.  The military has indicated  that by 2015, it would like to                                                               
have a 50 percent synthetic fuel.   This proposed tank farm could                                                               
be  part   of  fuel  storage.     However,  to  review   the  GTL                                                               
technologies and  capital cost is  beyond the AIDEA's  funding at                                                               
this time.   However,  he stated  that the  analysis needs  to be                                                               
done.   In further response  to Representative Neuman,  he agreed                                                               
that the analysis needs to be done.                                                                                             
                                                                                                                                
4:05:07 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on HCR 19.                                                                                     
                                                                                                                                
4:05:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE T. WILSON offered  her belief that this resolution                                                               
represents direct competition to  the private sector.  Currently,                                                               
refineries  are producing  gas  and  diesel in  the  state.   She                                                               
expressed concern  that the proposal  discusses bringing  in fuel                                                               
from other  states.   This could jeopardize  the Tesoro  or Flint                                                               
Hills  refineries and  without them,  the prices  could increase.                                                               
She  viewed this  proposal  as problematic.    Price gouging  was                                                               
examined  but  could  not  be  proved.    This  resolution  would                                                               
indicate  to the  public  that price  gouging  occurs in  Alaska.                                                               
Ultimately, the  state should not compete  with private business.                                                               
If  the private  sector  wants  to invest  the  $100 million,  as                                                               
Tesoro  did, that  would be  fine, but  the state  should not  be                                                               
involved.                                                                                                                       
                                                                                                                                
4:06:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS emphasized  that this  resolution supports                                                               
building a business case.  He  pointed out that the proposed tank                                                               
farm would  represent about 15  percent of the state's  usage and                                                               
is not a cure all.                                                                                                              
                                                                                                                                
REPRESENTATIVE   T.  WILSON   understood  that   this  resolution                                                               
supports a study,  but the state could use the  funding for other                                                               
purposes  such   as  a  bullet   line  or  biomass   that  avoids                                                               
competition.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS  explained  that residents  and  consumers                                                               
think $.90  per gallon  over the  "rack rate"  in Seattle  is too                                                               
much.  He  said, "I've never been afraid to  have a discussion or                                                               
look  at  competitive  opportunity.   Competition  makes  us  all                                                               
stronger and we can't be afraid  to look at options.  That's what                                                               
we're here for is to look out for 700,000 Alaskans."                                                                            
                                                                                                                                
REPRESENTATIVE  T. WILSON  agreed.   However, she  did not  think                                                               
this proposal is responsible if  the ultimate consequence will be                                                               
for local businesses  to close and Alaskans  ending up completely                                                               
dependent on the  Lower 48 for necessities.   She said, "Although                                                               
everything is started with just a  study, I've always found it is                                                               
better to stop it on this level than try to do it later on."                                                                    
                                                                                                                                
4:08:30 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON offered that he  has spent considerable time with the                                                               
DOL on two  issues.  One question  investigated excessive pricing                                                               
and discovered that while prices  were excessive, nothing illegal                                                               
transpired.  What  led to the DOL's office  involvement with this                                                               
as  an alternative,  even  though  it only  represents  10 to  15                                                               
percent of  the market, is  that the proposed project  could have                                                               
an impact  on gasoline  prices but fuel  supplies going  to rural                                                               
Alaska.    This  could  have  a stabilizing  effect.    While  he                                                               
expressed mixed feelings  on this resolution, he  offered that it                                                               
offers the potential for a  positive outcome for the overall good                                                               
of the state.                                                                                                                   
                                                                                                                                
REPRESENTATIVE T. WILSON remarked that  if everyone could stay in                                                               
business that  would be true.   She maintained her  concern about                                                               
out of  state businesses adversely impacting  local businesses to                                                               
the extent that fuel prices for  all Alaskans could cost the same                                                               
as in rural Alaska.                                                                                                             
                                                                                                                                
CHAIR  OLSON  related  that  Econ   One  is  within  a  month  of                                                               
completing its work.   He recalled that the  committee has worked                                                               
extensively with Econ One in the past.                                                                                          
                                                                                                                                
4:10:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN offered  his belief that HCR  19 is exactly                                                               
the  approach  to address  the  concerns  that Representative  T.                                                               
Wilson has with  the refineries, such as Flint  Hills and Tesoro.                                                               
Storage facilities  for fuel  can help  reduce the  dependence on                                                               
Lower 48 fuel in Western Alaska.   Fuel storage would enhance the                                                               
ability of Alaska refineries to  provide fuel for Alaskans.  When                                                               
oil prices  are low, the  refineries could produce more  fuel for                                                               
storage  to supply  Alaska's needs  for fuel.   He  characterized                                                               
this  as a  "win  win  situation."   He  said, "I  wholeheartedly                                                               
support this."                                                                                                                  
                                                                                                                                
4:12:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  moved to  report HCR  19 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.                                                                                                                          
                                                                                                                                
REPRESENTATIVE T. WILSON objected.                                                                                              
                                                                                                                                
A  roll call  vote was  taken.   Representatives Chenault,  Lynn,                                                               
Buch, Neuman,  and Olson voted in  favor of moving HCR  19 out of                                                               
committee.     Representative   T.  Wilson   voted  against   it.                                                               
Therefore,  HCR  19 was  reported  out  of  the House  Labor  and                                                               
Commerce Standing Committee by a vote of 5-1.                                                                                   
                                                                                                                                
4:13:20 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 4:13 to 4:15 p.m.                                                                            
                                                                                                                                

Document Name Date/Time Subjects
HB253 ver A.pdf HL&C 3/1/2010 3:15:00 PM
HB 253
HB253 Sponsor Statement.pdf HL&C 3/1/2010 3:15:00 PM
HB 253
HB253 Letter Rockys Heating 2-17-10.pdf HL&C 3/1/2010 3:15:00 PM
HB 253
HB287 ver R.pdf HL&C 3/1/2010 3:15:00 PM
HB 287
HB287 Sponsor Statement.pdf HL&C 3/1/2010 3:15:00 PM
HB 287
HB287 Sectional Analisys.pdf HL&C 3/1/2010 3:15:00 PM
HB 287
HB287 Supporting Documents-Shaftel 11-30-09.pdf HL&C 3/1/2010 3:15:00 PM
HB 287
HB287 Supporting Documents LaPiana Article.pdf HL&C 3/1/2010 3:15:00 PM
HB 287
HB287 Supporting Documents States of Adoption.pdf HL&C 3/1/2010 3:15:00 PM
HB 287
HB282 ver R.pdf HL&C 3/1/2010 3:15:00 PM
HB 282
HB282 Sponsor Statement.pdf HL&C 3/1/2010 3:15:00 PM
HB 282
HB282 Natural Health Update.pdf HL&C 3/1/2010 3:15:00 PM
HB 282
HB282 Email from Clarice Stewart 1-21-10.pdf HL&C 3/1/2010 3:15:00 PM
HB 282
HB282 Email from David Ottoson.pdf HL&C 3/1/2010 3:15:00 PM
HB 282
HB282 Email from Jacqui Yeagle 1-29-10.pdf HL&C 3/1/2010 3:15:00 PM
HB 282
HB282 Email from Lupita Alvarez 1-26-10.pdf HL&C 3/1/2010 3:15:00 PM
HB 282
HB282 Letter C Trollan 1-21-10.pdf HL&C 3/1/2010 3:15:00 PM
HB 282
HB282 Letter from Dr. Emily Kane 2-5-10.pdf HL&C 3/1/2010 3:15:00 PM
HB 282
HB282 Letter Sharon Sellens 1-31-10.pdf HL&C 3/1/2010 3:15:00 PM
HB 282
HCR19 Fiscal Note L&C 3-1-10.pdf HL&C 3/1/2010 3:15:00 PM
HCR 19
HB282 Fiscal Note-CED-CBPL-2-26-10.pdf HL&C 3/1/2010 3:15:00 PM
HB 282
HB282 Fiscal Note-DHSS-MAA-2-25-10.pdf HL&C 3/1/2010 3:15:00 PM
HB 282
HB282 Fiscal Note-DHSS-MAA-2-25-10.pdf HL&C 3/1/2010 3:15:00 PM
HCR19 AIDEA fact sheet 3-1-10.pdf HL&C 3/1/2010 3:15:00 PM
HCR 19
HB282 Overview of Naturopathic Regulation.PDF HL&C 3/1/2010 3:15:00 PM
HB 282
HB282 Email from Dr. Emily Kane 2-25-10.pdf HL&C 3/1/2010 3:15:00 PM
HB 282
HB282 Letter ASMA 3-1-10.pdf HL&C 3/1/2010 3:15:00 PM
HB 282
HB282 ASMA-AMA Scope of Practice 9-2009.pdf HL&C 3/1/2010 3:15:00 PM
HB 282
HB282 ASMA-AMA-Issue Brief Naturopaths 12-09.pdf HL&C 3/1/2010 3:15:00 PM
HB 282
HB287 Fiscal Note-LAW-CIV-02-26-10.pdf HL&C 3/1/2010 3:15:00 PM
HB 287