Legislature(2009 - 2010)BARNES 124
03/10/2010 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HB337 | |
| HB308 | |
| HB369 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 308 | TELECONFERENCED | |
| *+ | HB 337 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 369 | TELECONFERENCED | |
HB 369-IN-STATE PIPELINE/COORDINATOR /TEAM
7:18:54 PM
CO-CHAIR NEUMAN announced that the third order of business is
HOUSE BILL NO. 369, "An Act relating to an in-state natural gas
pipeline, the office of in-state gasline project manager, the
Joint In-State Gasline Development Team, and the In-State
Gasline Steering Committee; and providing for an effective
date." [Before the committee was Version E, the proposed
committee substitute for HB 308, labeled 26-LS1527\E, Cook,
3/2/10.]
7:19:08 PM
CO-CHAIR JOHNSON moved the committee adopt a new proposed
committee substitute for HB 308, labeled 26-LS1527\S, Cook,
3/10/10 ("Version S"), as the working document.
CO-CHAIR NEUMAN objected for explanation purposes.
TOM WRIGHT, Staff, Representative Mike Chenault, Alaska State
Legislature, explained that the changes incorporated into
Version S are mostly deletions of items from Version E. The
provision for an In-state Gasline Steering Committee was
removed, the duties of the steering committee were moved to
subsection (a) of the provision for the Joint In-state Gasline
Development Team, and the conflicts of interest and ethics
provision for steering committee members was removed.
7:20:15 PM
CO-CHAIR NEUMAN asked whether Representative Seaton's concerns
are addressed by Version S.
MR. WRIGHT responded he would prefer to let the sponsor discuss
those concerns later.
CO-CHAIR JOHNSON inquired why the provision for a steering
committee was removed.
MR. WRIGHT replied a number of members thought the steering
committee would be somewhat cumbersome. The reason for having
the steering committee provision was to ensure good public
participation in the development of the gasline. Removal of the
committee does not preclude the Joint In-state Gasline
Development Team from calling on others with the expertise or
calling on affected communities when the need arises. In
response to Co-Chair Neuman, he added that the sponsor hopes
there will be a lot of public participation in this process.
7:22:27 PM
CO-CHAIR NEUMAN removed his objection to Version S. There being
no further objection, Version S was before the committee.
The committee took an at-ease from 7:23 p.m. to 7:24 p.m.
7:25:01 PM
REPRESENTATIVE SEATON moved Amendment 1 written as follows
[original punctuation provided]:
Page 3, line 18, following "communities,":
Insert "the cost of transporting natural gas to
other locations in the state,"
Page 3, line 26, following "tidewater":
Insert "in the state and to other locations in
the state"
Page 5, line 5, following "state":
Insert "and to other locations in the state"
CO-CHAIR JOHNSON objected for discussion purposes.
REPRESENTATIVE SEATON explained that the proposed Joint In-state
Gasline Development Team would exist for quite some time and
after a North Slope pipeline is constructed to tidewater, a
number of in-state gaslines may be developed. Amendment 1 would
give this team the authority to look at these other in-state
pipelines to provide natural gas to residents at reasonable
cost. He said there are three different places where language
would be inserted into Version S.
7:27:08 PM
REPRESENTATIVE SEATON, in response to Co-Chair Neuman, noted
that the first insertion on page 3, line 18, does not mean the
state would be subsidizing; rather the state would be computing
and looking at plans for delivery and costs.
REPRESENTATIVE MIKE CHENAULT, Alaska State Legislature, sponsor
of HB 369, stated that while he supports the idea of the cost
for transportation, he is concerned that it would dilute the
major focus of costing out an in-state gasline so that it can be
moved forward. The provisions of Amendment 1 would need to
become a part of the process if this process does go forward,
but now may not be the right time to include them. He is
concerned about spending time and effort to study these other
transmission lines rather than getting to the real problem of a
main line for in-state gas.
7:29:51 PM
CO-CHAIR NEUMAN surmised it is the sponsor's intent that once a
big in-state gasline is developed, gas be delivered to as many
communities as possible.
REPRESENTATIVE CHENAULT answered correct.
REPRESENTATIVE SEATON argued that Amendment 1 does not dilute
anything, given all the team duties that are outlined on page 3,
starting at line 11.. The intent and structure of Amendment 1
is for after an in-state gasline is built, so its provisions
would not come ahead of building a gas pipeline.
7:32:24 PM
REPRESENTATIVE CHENAULT reiterated his agreement with where
Representative Seaton is headed because, in time, every area of
the state will need to be looked at. However, his concern is
that the state must first focus on developing and building a
main line before looking at the other options.
CO-CHAIR JOHNSON added that the reason for HB 369 is because the
state has taken its eye off building an in-state gasline. He
said Amendment 1 did not concern him at first, but after hearing
the sponsor's concern he must agree about staying focused,
although he, too, supports where Representative Seaton is going.
CO-CHAIR NEUMAN offered his support for where Representative
Seaton is going, but said he agrees with staying focused.
7:34:41 PM
CO-CHAIR JOHNSON moved that Amendment 1 be divided into three
parts: lines 1 and 2 becoming Amendment 1, lines 4 and 5
becoming Amendment 2, and lines 7 and 8 becoming Amendment 3.
REPRESENTATIVE SEATON said he would consider that a friendly
amendment.
CO-CHAIR NEUMAN opened discussion on the new Amendment 1,
consisting of lines 1 and 2 of former Amendment 1, written as
follows [original punctuation provided]:
Page 3, line 18, following "communities,":
Insert "the cost of transporting natural gas to
other locations in the state,"
7:35:39 PM
REPRESENTATIVE SEATON said that if the bill does not look at the
communities he represents, then they will be out of the picture
forever because there would be no authorization in statute to do
so subsequent to completion of the main in-state gasline. Thus,
he would like to request that lines 16-18 on page 3 of Version S
be deleted, because they would also deflect from the main focus
of constructing an in-state gasline. He noted that lines 16-18
do exactly the same thing for other communities in the state as
Amendment 1 would do for his communities.
7:37:04 PM
REPRESENTATIVE OLSON inquired whether Homer and Seward are
considered coastal communities.
REPRESENTATIVE SEATON offered his belief that the construction
of line 18, page 3, Version S, "Yukon river and coastal
communities" would probably be tied together as the coastal
communities along the Yukon River. Additionally, the pipeline
specified in line 18 is for liquefied natural gas or propane,
not natural gas.
7:38:00 PM
CO-CHAIR JOHNSON inquired whether Representative Seaton is
looking for propane to go to his communities as well.
REPRESENTATIVE SEATON reiterated that the coastal communities on
line 18 are in reference to liquefied natural gas or propane.
His communities would be served by a transmission pipeline after
a mainline has been built from the North Slope and ties into
Southcentral. If it is being said that the parallel language,
"the cost of transporting natural gas to other locations", is
superfluous and detrimental to a pipeline, then the same could
also be said of the language on lines 16-18 which states,
"delivery and costs of natural gas to communities along the
pipeline route, manufacturing opportunities for gas-to-liquids,
plans for delivery and costs of liquefied natural gas or propane
to Yukon river and coastal communities".
7:39:30 PM
CO-CHAIR NEUMAN stated that lines 16-18 relate to being along
the way of a main in-state gasline.
CO-CHAIR JOHNSON removed his objection to Amendment 1, saying
the more this has been explained to him the more he likes it.
CO-CHAIR NEUMAN objected to Amendment 1.
REPRESENTATIVE CHENAULT, after looking at how lines 16-18 are
written, said he can more or less agree with Representative
Seaton. He changed his objection and accepted Amendment 1,
saying he does not want members of the legislature or residents
of Alaska to feel shortchanged.
CO-CHAIR NEUMAN withdrew his objection. There being no further
objection, Amendment 1 was adopted.
7:41:49 PM
REPRESENTATIVE SEATON moved Amendment 2 written as follows
[original punctuation provided]:
Page 3, line 26, following "tidewater":
Insert "in the state and to other locations in
the state"
REPRESENTATIVE SEATON explained there was earlier discussion
about whether tidewater could be a Canadian port or something
else. Amendment 2 clarifies that "tidewater" is a tidewater
port in the state as well as other locations in the state.
7:42:53 PM
CO-CHAIR NEUMAN noted that the duty of the team is to consider
all aspects. He asked how far out those duties would extend;
for example, tankers associated with a liquefied natural gas
(LNG) facility.
REPRESENTATIVE CHENAULT, in regard to Amendment 2, said Version
S states to select a route for an in-state natural gas pipeline
from the North Slope to tidewater. It is his intention the
completion of that pipeline is at tidewater in the state of
Alaska and not in Canada or elsewhere.
7:44:12 PM
CO-CHAIR NEUMAN related that "Shell" intends to put LNG
facilities on floating platforms. He presumed the sponsor's
intent is not to have a floating platform for an LNG export
facility in the northwestern corner of the state, but to bring
gas to the core area of the state through the Railbelt.
REPRESENTATIVE CHENAULT responded his intent is tidewater in the
Southcentral region of the state. He said it is not the
intention of HB 369 to go to the Bering Sea in any form or
fashion with the main pipeline. Additionally, he believes any
ports in the Chukchi or Beaufort seas would be too shallow to
accommodate an LNG tanker. In further response to Co-Chair
Neuman, he said that when originally proposed, the in-state gas
pipeline was to go to Valdez because that is a deepwater port
that can handle tankers large enough to economically carry the
LNG all over the world. Cook Inlet is not as deep as Prince
William Sound, which requires the use of smaller tankers for the
LNG facility that is shipping to Japan.
There being no objection, Amendment 2 was adopted.
REPRESENTATIVE SEATON elected not to offer Amendment 3.
7:48:17 PM
REPRESENTATIVE KAWASAKI moved to adopt Amendment 4 written as
follows [original punctuation provided]:
Page 3, line 22:
Delete "by July 1, 2011, and take actions
necessary"
Page 3, line 23:
Delete "2015."
Insert "2016. The development team shall make a
commercial offering by July 1, 2011. The commercial
offering must consist of the issuance of a request for
proposals to potential in-state natural gas pipeline
project developers who will own the project or a
portion of it. The request for proposals must require
that commercial evaluations in the proposals be based
on engineering and permitting completed by the state
and its contractors and that proposals include
reimbursement for the cost incurred by the state of
engineering work and gathering and interpreting data.
The request for proposals must include notice that
proposals will be analyzed by the state, together with
terms and conditions for selection. The development
team shall report to the legislature on the date the
commercial offering is ready."
Page 4, line 8:
Delete "for construction of"
Insert "to meet construction deadlines for"
Page 4, line 15:
Delete "by July 1, 2011, and report to the
legislature by that date"
Insert "to enable natural gas to flow down the
pipeline by 2016"
CO-CHAIR JOHNSON objected.
7:48:41 PM
REPRESENTATIVE KAWASAKI explained that Amendment 4 is similar to
an amendment to Version E that was offered [and withdrawn] by
Co-Chair Johnson on [3/8/10]. He said Amendment 4 is conforming
language as mentioned by Mr. Bob Swenson, In-state Gas Project
Manager [on 3/8/10]. The amendment would require that the
entity building the pipeline reimburse the state for its
engineering costs.
CO-CHAIR JOHNSON maintained his objection to Amendment 4.
7:50:04 PM
CO-CHAIR NEUMAN said he strongly objects to Amendment 4. He
recalled that during discussions on [3/8/10] there was a problem
with the word must. If the state must receive 100 percent
reimbursement of its engineering expenses through purchase of
the permits for the pipeline, and the purchase offer does not do
this, then this pipeline could not happen. He argued that the
purchaser will be spending billions of its own dollars to build
the gasline and diversify the state's economy; thus, it does not
hurt the state to have its own money in the game, which is
something that states and communities do all around the world.
7:52:37 PM
CO-CHAIR JOHNSON agreed with Co-Chair Newman, saying Amendment 4
could exclude a viable builder of the in-state pipeline. This
should be a decision that is made by members of the legislature
at that time should the purchase offer not be for a 100 percent
reimbursement. He said he wants to send the signal that Alaska
is invested in this project and wants to make it happen. There
could be negotiations at the time to get the money back through
tariffs. He said he objects to Amendment 4 for the same reasons
he had on [3/8/10].
7:53:51 PM
REPRESENTATIVE SEATON, on behalf of Representative Chenault,
moved friendly Amendment 1 to Amendment 4, as follows:
Line 13:
Delete "state"
Insert "Joint [In-state] Gasline Development
Team"
CO-CHAIR NEUMAN objected, reiterating his opposition to the
requirement that the state be reimbursed for 100 percent of its
expenses. In response to Representative Seaton, he removed his
objection to Amendment 1 to Amendment 4, but maintained his
objection to Amendment 4.
There being no objection, Amendment 1 to Amendment 4 was
adopted.
7:57:28 PM
CO-CHAIR NEUMAN said his interpretation of Amendment 4, as
amended, is that if the state does not receive a purchase
proposal that provides 100 percent reimbursement of its
expenses, the in-state project will not go forward.
CO-CHAIR JOHNSON said he does not read the amendment quite like
that, although he did at first and for which he apologizes. He
pointed out that the language says "include reimbursement"; it
does not say full reimbursement. Thus, a proposal of just $1 in
reimbursement would qualify.
CO-CHAIR NEUMAN said he would be more comfortable with line 9
stating "may" require instead of "must" require.
REPRESENTATIVE CHENAULT agreed with Co-Chair Neuman.
8:00:32 PM
CO-CHAIR JOHNSON said it is important to retain the word "must"
on line 9 to ensure proposals are based upon engineering and
sound economics. He suggested the word "may" be inserted on
line 11 after "proposals" because that would accomplish the same
goal of not requiring full reimbursement of the state's
expenses, but still requiring that the commercial proposals be
based upon the state's engineering and permitting. He offered
Amendment 2 to Amendment 4 as follows:
Line 11, after "proposals":
Insert "may"
REPRESENTATIVE KAWASAKI accepted the amendment. There being no
objection, Amendment 2 to Amendment 4 was adopted.
8:03:40 PM
REPRESENTATIVE P. WILSON asked why Representative Kawasaki
believes the following language needs to be included in
Amendment 4: "proposals may include reimbursement for the cost
incurred by the state of engineering work and gathering and
interpreting data."
REPRESENTATIVE KAWASAKI replied the state spends a lot of money
collecting data that is utilized by the public, such as aerial
mapping and right of way information. Since public money is
being used for this project, it is fair to ask that the private
company undertaking this project repay the state in return for
receiving valuable information.
8:06:05 PM
REPRESENTATIVE SEATON added he is more comfortable with
Amendment 4 as now amended because the word "may" allows the
latitude to not collect full reimbursement should the project
not be fully economic.
REPRESENTATIVE OLSON inquired whether the maker of the amendment
objected to the Alaska Gasline Inducement Act's $500 million
signing bonus.
REPRESENTATIVE KAWASAKI answered he does not remember.
8:07:43 PM
CO-CHAIR JOHNSON moved Amendment 3 to Amendment [4] to delete
lines 1-2.
REPRESENTATIVE KAWASAKI objected.
CO-CHAIR JOHNSON opined that removal of the deadline date from
HB 369 would soften the urgency of building the pipeline.
Pressure needs to be continued and the team needs empowerment to
move as quickly and expeditiously as possible.
CO-CHAIR NEUMAN agreed, saying the purpose of HB 369 is to
provide dates and ensure that work toward a pipeline continues
as fast as possible. He would like to see construction ready by
July 1, 2011; therefore, he wants to see deadlines and an
aggressive timeline.
8:09:40 PM
REPRESENTATIVE CHENAULT, in response to Representative Seaton,
said Amendment 4 is the same as an amendment that was seen on
[3/8/10], and it would delay the project. He said he objects to
Amendment 4 and agrees with the co-chair about moving an in-
state pipeline forward on an aggressive schedule. He related
that he told the administration he has no problem with the
proposed fiscal note of $380 million, given that $500 million
was provided for the pipeline project outside of this one.
8:11:38 PM
REPRESENTATIVE KAWASAKI maintained his objection.
A roll call vote was taken. Representatives P. Wilson, Johnson,
Seaton, Olson, and Neuman voted in favor of Amendment 3 to
Amendment 4. Representative Kawasaki voted against it.
Therefore, Amendment 3 to Amendment 4 passed by a vote of 5-4.
8:13:17 PM
CO-CHAIR JOHNSON moved Amendment 4 to Amendment 4 to delete the
entirety of lines 16-22.
REPRESENTATIVE KAWASAKI objected.
CO-CHAIR JOHNSON said this amendment speaks to the same thing of
lengthening the dates, and the purpose is to construct a
pipeline as quickly as possible.
REPRESENTATIVE KAWASAKI withdrew his objection. There being no
further objection, Amendment 4 to Amendment 4 was passed.
8:14:44 PM
CO-CHAIR JOHNSON moved Amendment 5 to Amendment 4 as follows:
Line 5:
Delete "Delete '2015.'"
Line 6:
Delete "2016."
There being no objection, Amendment 5 to Amendment 4 was passed.
8:16:27 PM
REPRESENTATIVE OLSON moved Amendment 6 to Amendment 4 to delete
lines 6-14.
REPRESENTATIVE KAWASAKI objected.
CO-CHAIR NEUMAN supported the amendment.
REPRESENTATIVE P. WILSON said she thinks lines 6-14 are good
because the commercial proposals and the evaluations need to be
based on facts.
[Members discussed the protocol of Amendment 6 to Amendment 4
versus voting for Amendment 4, as amended.]
A roll call vote was taken. Representatives Olson and Neuman
voted in favor of Amendment 6 to Amendment 4. Representatives
Kawasaki, P. Wilson, Seaton, and Johnson voted against it.
Therefore, Amendment 6 to Amendment 4 failed by a vote of 2-4.
8:21:28 PM
CO-CHAIR JOHNSON withdrew his objection to Amendment 4, as
amended.
REPRESENTATIVE OLSON objected to Amendment 4, as amended.
A roll call vote was taken. Representatives Seaton and Kawasaki
voted in favor of Amendment 4, as amended. Representatives
Olson, P. Wilson, Neuman, and Johnson voted against it.
Therefore, Amendment 4, as amended, failed by a vote of 2-4.
8:23:57 PM
REPRESENTATIVE SEATON noted that at an earlier meeting he had
inquired about how an open season would be conducted by the
Regulatory Commission of Alaska (RCA) and whether the pipeline
would be a common carrier or a contract carrier under HB 369.
CO-CHAIR NEUMAN said the information Representative Seaton had
requested about pipeline corridor statutes on common carriers
was delivered just prior to the start of this meeting, and those
corridors are not included in HB 369.
8:25:17 PM
REPRESENTATIVE SEATON clarified he is referring to the July 1,
2011, date on page 4, line 15. He said Mr. Swenson was to
report back about whether the pipeline would be a common carrier
or contract carrier and how HB 369 would deal with that.
CO-CHAIR NEUMAN said he believes that is yet to be determined.
REPRESENTATIVE CHENAULT agreed.
ROBERT SWENSON, Project Manager, In-State Gas Project, Alaska
Mental Health Trust Land Office, Department of Natural
Resources, stated he does not have the expertise to answer the
question. He did visit with Mr. Balash and his understanding is
that an in-state pipeline would be required to be common carrier
pipeline that is regulated by the RCA.
8:27:37 PM
CO-CHAIR NEUMAN presumed that current plans include bringing in
collector pipes and to re-distribute gas throughout the state to
act as a common carrier.
MR. SWENSON responded correct; it is to maximize the
distribution of gas to consumers within the state.
REPRESENTATIVE SEATON inquired whether under RCA jurisdiction
any new gas finds would be excluded from being carried in the
pipeline or rolled into the pipeline.
MR. SWENSON understood that if a producer and a consumer are
using 100 percent of the pipeline and another producer wants
access to that line to provide gas to a consumer, then that
access would have to be allowed in a common carrier system.
Under a contract carrier system, the contract would take
precedence and access to that pipeline would then have to be
through expansion.
8:29:34 PM
REPRESENTATIVE SEATON said he thinks it is very important for
members to be able to tell the people of the state that this is
an open access pipeline under HB 369.
CO-CHAIR NEUMAN commented that having as much deliverable gas as
possible will keep the costs down.
REPRESENTATIVE SEATON said he is unfamiliar with pipelines that
would be regulated by the RCA and since that is the intention
with this pipeline it is good to know that information.
CO-CHAIR NEUMAN opened public testimony, then closed it after
ascertaining that no one wished to testify.
8:31:22 PM
REPRESENTATIVE P. WILSON asked whether the intent is still to
have requests for proposals, given that Amendment 4 failed.
REPRESENTATIVE CHENAULT answered that is exactly what he is
after. When a proposal is put together, decisions will be made
whether to have a pipeline company or the state build the
pipeline. The reason for HB 369 is because he would like to see
the state get to this point sooner rather than later. This
project is only one of several options, but it cannot be an
option without information on whether it is a viable project.
He is interested in providing gas to communities throughout the
state at every opportunity possible. The intent is to get to a
project that can actually be looked at by combining the talents
of the agencies that have been looking at a pipeline over the
past years.
8:35:13 PM
REPRESENTATIVE CHENAULT, in response to Co-Chair Neuman, said it
seems like the state continues to delay on this project and will
be in the position of wishing it had started earlier.
CO-CHAIR NEUMAN opined that HB 369 is about thousands of good-
paying jobs throughout Alaska. This project would empower
communities and enable them to finance their own destinies
rather than relying on state funding, and it is a priority
project for 82 percent of Alaska's residents. He warned that 90
percent of Alaska's revenue is coming from just three companies,
and the state must diversify its economy to change this.
8:38:26 PM
CO-CHAIR JOHNSON moved to report HB 369, Version 26-LS1527\S,
Cook, 3/10/10, as amended, from the committee with individual
recommendations and any accompanying and forthcoming fiscal
notes. There being no objection, CSHB 369(RES) was reported
from the House Resources Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| PXD Comments CSHB308 031010.pdf |
HRES 3/10/2010 1:00:00 PM |
HB 308 |
| HB 308 Savant AK 3.10.10.pdf |
HRES 3/10/2010 1:00:00 PM |
HB 308 |
| AOGA Presentation 3.10.10.pdf |
HRES 3/10/2010 1:00:00 PM |
HB 308 |
| AOGA Testimony on CSHB308 FINAL.pdf |
HRES 3/10/2010 1:00:00 PM |
HB 308 |
| HB 337.pdf |
HRES 3/10/2010 1:00:00 PM |
HB 337 |
| HB 337 Gov Letter.pdf |
HRES 3/10/2010 1:00:00 PM |
HB 337 |
| HB 337 Fiscal Notes 1.2.3..pdf |
HRES 3/10/2010 1:00:00 PM |
HB 337 |
| CS HB 369 v.S.pdf |
HRES 3/10/2010 1:00:00 PM |
HB 369 |
| HB 308 ConocoPhillips Testimony 3.10.10.pdf |
HRES 3/10/2010 1:00:00 PM |
HB 308 |
| HB 308 ExxonMobil Testimony 3.10.10.pdf |
HRES 3/10/2010 1:00:00 PM |
HB 308 |