02/15/2011 10:15 AM House ECON. DEV., TRADE & TOURISM
| Audio | Topic |
|---|---|
| Start | |
| Discussion on Planned Closure of the Kenai Liquefied Natural Gas Plant | |
| HB67 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 67 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, INTERNATIONAL
TRADE AND TOURISM
February 15, 2011
10:19 a.m.
MEMBERS PRESENT
Representative Bob Herron, Chair
Representative Kurt Olson, Vice Chair
Representative Neal Foster
Representative Wes Keller
Representative Cathy Engstrom Munoz
Representative Steve Thompson
Representative Berta Gardner
Representative Chris Tuck
MEMBERS ABSENT
Representative Peggy Wilson
OTHER LEGISLATORS PRESENT
Representative Anna Fairclough
Representative Eric Feige
Senator Joe Paskvan
COMMITTEE CALENDAR
DISCUSSION ON PLANNED CLOSURE OF THE KENAI LIQUIFIED NATURAL GAS
PLANT
- HEARD
HOUSE BILL NO. 67
"An Act relating to transferable film production tax credits;
and providing for an effective date by amending the effective
dates of secs. 3 and 4, ch. 63, SLA 2008."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 67
SHORT TITLE: FILM PRODUCTION TAX CREDIT
SPONSOR(s): REPRESENTATIVE(s) TUCK, HERRON
01/18/11 (H) PREFILE RELEASED 1/7/11
01/18/11 (H) READ THE FIRST TIME - REFERRALS
01/18/11 (H) L&C, FIN
01/26/11 (H) EDT REFERRAL ADDED BEFORE L&C
02/10/11 (H) EDT AT 10:15 AM BARNES 124
02/10/11 (H) Heard & Held
02/10/11 (H) MINUTE(EDT)
02/15/11 (H) EDT AT 10:15 AM BARNES 124
WITNESS REGISTER
REPRESENTATIVE MIKE CHENAULT
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided a statement via a previously
recorded video during the discussion on Planned Closure of the
Kenai Liquefied Natural Gas (LNG) Plant.
TOM NELSON, Deputy Commissioner
Office of the Commissioner
Department of Labor & Workforce Development (DLWD)
Juneau, Alaska
POSITION STATEMENT: Testified during the discussion on Planned
Closure of the Kenai Liquefied Natural Gas Plant.
DAN CLARK, Manager
Cook Inlet Assets
ConocoPhillips Alaska
Anchorage, Alaska
POSITION STATEMENT: Provided discussion points during the
discussion on Planned Closure of the Kenai Liquefied Natural Gas
Plant.
JANIS WILSON, Commissioner
Regulatory Commission of Alaska (RCA)
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion on Planned
Closure of the Kenai Liquefied Natural Gas Plant.
COLLEEN STARRING, President
ENSTAR Natural Gas Company
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion on Planned
Closure of the Kenai Liquefied Natural Gas Plant.
CARRI LOCKHART, Asset Team Manager
Marathon Oil Corporation
Anchorage, Alaska
POSITION STATEMENT: Testified during discussion on Planned
Plant Closure of the Kenai Liquefied Natural Gas Plant.
PETE KALAMARIDES
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 67.
CINDY DRAPER, Rentals Manager
ABC Motorhome and Car Rental, Inc.
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 67.
BRICE HABERGER
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 67.
TED SMITH
Barrow, Alaska
POSITION STATEMENT: Testified in support of HB 67.
GARY ZIMMERMAN, General Manager-Statewide
Avis Rent-A-Car
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 67.
MAYA SALGANAK, Assistant Professor of Film/Video Arts;
Director of Film Studies
University of Alaska Fairbanks (UAF)
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 67.
GREG KESSLER, Alaska Commercial Director
Totem Ocean Trailer Express, Inc. (TOTE)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 67.
KAREN TALLENT, Studio Teacher
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 67.
ACTION NARRATIVE
10:19:53 AM
CHAIR BOB HERRON called the House Special Committee on Economic
Development, International Trade and Tourism meeting to order at
10:19 a.m. Present at the call to order were Representatives
Herron, Olson, Thompson, and Foster. Representatives Keller,
Munoz, Gardner, and Tuck arrived as the meeting was in progress.
Representatives Anna Fairclough and Eric Feige, and Senator Joe
Paskvan were also present.
^DISCUSSION ON PLANNED CLOSURE OF THE KENAI LIQUEFIED NATURAL
GAS PLANT
DISCUSSION ON PLANNED CLOSURE OF THE KENAI LIQUIFIED NATURAL GAS
PLANT
10:20:15 AM
CHAIR HERRON introduced a video previously recorded by
Representative Mike Chenault, Speaker of the House of
Representatives.
10:21:35 AM
REPRESENTATIVE MIKE CHENAULT, Alaska State Legislature, via a
previously recorded video, informed the committee that his
constituency includes employees of the ConocoPhillips Alaska
(ConocoPhillips) Liquefied Natural Gas (LNG) plant that was
recently scheduled to close. He said that he knew most of the
employees at the Kenai plant, and expressed his hope that other
Alaskans are aware that the facility was one of the few value-
added producers in the state, in addition to providing 30-60
highly-paid jobs in the community. He opined it is imperative
for legislators to do all they can to prevent the failure of
other industries. In addition to jobs, other losses to the
local community include the industry's contributions to
community organizations, to schools, to the tax base, and to the
electric utility's power load. Representative Chenault said, "I
think it's a sad day in Alaska's history that we're losing a
facility that has been a contributing factor to Alaska's growth
for the last 40 some-odd years ...."
10:24:16 AM
REPRESENTATIVE OLSON reflected on Representative Chenault's long
involvement and depth of knowledge in oil and gas matters on the
Kenai Peninsula. Representative Olson said his constituents are
also affected, as most of the people that work at the plant or
on the platforms live in his district - even though the plant is
located in Representative Chenault's district - and the impact
of the closure will be felt throughout the central peninsula.
The commissioner of the Department of Labor & Workforce
Development (DLWD) has offered services to the employees similar
to those available at the Kenai transition office established
for the employees of the Agrium Inc. (Agrium) plant that was
closed a few years ago. Representative Olson opined the
following causes led to the closure: the failure of
ConocoPhillips and Marathon Oil Company (Marathon) to obtain a
10-year extension of their export license led to their inability
to obtain long-term contracts with Tokyo Electric Power Company,
Incorporated (TEPCO); a world-wide glut of cheap natural gas and
LNG from shale and other sources that have lower costs of
development and production; the length of time taken by the
Regulatory Commission of Alaska (RCA) for its decisions on the
approval of Cook Inlet natural gas contracts stopped new
explorers from looking for natural gas; the disruption in the
local market for natural gas due to the Agrium plant closure.
Representative Olson concluded this closure will not have quite
as much impact on the Kenai Peninsula as did the Agrium closure,
but there will be a significant loss of property taxes.
10:31:10 AM
TOM NELSON, Deputy Commissioner, Office of the Commissioner,
Department of Labor & Workforce Development (DLWD), stated that
his department has been in contact with ConocoPhillips and has
an established good working relationship with the company. He
expressed his understanding that Marathon Oil has no employees
affected by the plant closure, and that ConocoPhillips has begun
to search for other opportunities for the approximately 30
employees who have lost their jobs. The department is also in
contact with the legislators from the Kenai Peninsula and with
local governmental officials. In addition to helping employees,
DLWD works with employers, and has found that job openings are
available for the primary occupations affected such as
operators, roustabouts, and instrument technicians. In fact,
Schulmberger Oil Field Services, Marathon Oil, Arctic Slope
Regional Corporation (ASRC) Energy Services, and Tesoro
Corporation will have job openings this spring. The department
also has a rapid response team staffed by employment and
training professionals who respond to this type of situation by
working with employers, employees, and the bargaining units that
represent displaced employees. Services from the DLWD include
providing information and referrals to resources at the job
center. Furthermore, DLWD provides the employers with
information on applying for U.S. Department of Labor Trade
Adjustment Assistance (TAA) funds for additional training and
employment resources.
10:35:10 AM
REPRESENTATIVE GARDNER asked for further information on the
Trade Adjustment Assistance act.
10:35:27 AM
MR. NELSON responded that approximately 8,000 residents in the
state are eligible for TAA services. The act applications are
for companies that have gone out of business or are depressed
because of foreign prices or competition. In further response
to Representative Gardner, he confirmed that the TAA client is
the employer and assistance services are provided to the
employees.
10:36:14 AM
DAN CLARK, Manager, Cook Inlet Assets, ConocoPhillips Alaska,
said he would provide a brief history of the plant, the recent
announcement to ConocoPhillips's employees regarding the
cessation of LNG energy exports, and a statement of
ConocoPhillips's commitments. The Kenai Liquefied Natural Gas
(LNG) plant has been in operation for 41 years and is currently
the only significant industrial user of natural gas in
Southcentral. On 10/5/2010, the plant received a two-year
export license which will expire on 3/31/2013; however, market
conditions do not support the continued operation of the plant.
The plant is jointly owned by ConocoPhillips and Marathon, and
will cease LNG exports effective in April or May 2011. Although
market conditions are not commercially viable for the export of
LNG, ConocoPhillips will continue to operate and staff both the
Beluga River and North Cook Inlet units. ConocoPhillips will
preserve the plant for future options such as exports of North
Slope natural gas, or a reconfiguration of the plant to an
import facility. He assured the committee that his company will
continue to work with affected employees to look for other
opportunities within ConocoPhillips, and will honor its gas
supply contracts with Chugach Electric Association, Inc. and
ENSTAR Natural Gas Company. Mr. Clark concluded that the Kenai
LNG plant has been safely and efficiently operated for 41 years
and ConocoPhillips is proud of, and thankful for, its employees.
10:39:20 AM
CHAIR HERRON asked whether the plant will be preserved in "warm
or cold mothballing" condition.
10:39:38 AM
MR. CLARK said basically the plant will be maintained in good
condition so that it could be "utilized in an expeditious
fashion."
REPRESENTATIVE KELLER asked what would be involved to
reconfigure the plant for imports.
10:40:15 AM
MR. CLARK advised that the plant has been liquefying, storing,
and piping natural gas. A reconfiguration to allow imports will
require piping modifications from the existing docks, and the
construction of facilities to take the stored LNG, vaporize it,
and pipe it out.
CHAIR HERRON, observing that ConocoPhillips makes plans for "50,
60, 70, 80 years out," surmised its future may include importing
LNG.
10:41:45 AM
MR. CLARK acknowledged that utilities believe the importation of
LNG may be needed, and ConocoPhillips intends to import or
export to meet the future need.
REPRESENTATIVE GARDNER asked whether securing a 10-year export
license would have allowed ConocoPhillips to fulfill its
contract to export LNG to Japan.
10:42:26 AM
MR. CLARK said that it was difficult to speculate on other
scenarios.
CHAIR HERRON asked whether the state was involved in the effort
to renew the export license.
10:43:24 AM
MR. CLARK responded that his company has long experience in this
matter; however, there was support during the application for
the last export license. He added that ConocoPhillips has
marketing responsibility without direct interaction from the
state.
CHAIR HERRON asked whether state government anticipated the
closure of the plant.
MR. CLARK said he did not know. ConocoPhillips sought the
license extension and commercial contracts.
10:44:55 AM
CHAIR HERRON questioned the future summer demand for gas.
MR. CLARK advised that the gas that would have been exported by
the plant will have to be restricted, and gas production will be
"shut in" as a result.
10:45:49 AM
REPRESENTATIVE OLSON observed most of ConocoPhillips's assets
are older, and may not "[come] back, at some point of time in
the future."
MR. CLARK affirmed that fields in the Beluga River and North
Cook Inlet units have been in production for 40-plus years; thus
those with higher levels of water production are at risk. His
company will manage these conditions as best it can to minimize
the potential impact on future production.
10:46:57 AM
CHAIR HERRON asked for an estimate of the costs to restart the
plant.
MR. CLARK opined that a restart for a long-term gas supply would
require significant investment. On the other hand, a short-term
situation would be assessed differently. In further response to
Chair Herron, he speculated the cost would be "hundreds of
millions of dollars."
10:49:26 AM
CHAIR HERRON recalled efforts to bring newcomers into the Cook
Inlet gas fields, and asked whether the closure impacts the
plans for a jack-up rig.
MR. CLARK confirmed that the market for gas is not there, but
this would not impact the search for oil.
10:50:10 AM
REPRESENTATIVE FAIRCLOUGH asked whether ConocoPhillips has LNG
plants in other markets.
MR. CLARK said ConocoPhillips has a facility in northern
Australia that sells in the Asia-Pacific markets, a facility in
Qatar, and ownership in several others.
10:50:44 AM
REPRESENTATIVE FAIRCLOUGH then asked whether the company was
able to secure economically viable contracts for other markets.
MR. CLARK explained that those particular contracts "have been
very, very significant investments within the last five years
... or so, and so have been long-term arrangements that have
been put in place with buyers." In further response to
Representative Fairclough, he estimated that the length of those
contracts is about 20 years.
10:51:34 AM
REPRESENTATIVE FAIRCLOUGH surmised these contracts were for the
Asian market.
MR. CLARK expressed his belief that significant portions go to
Japan.
10:51:58 AM
REPRESENTATIVE FAIRCLOUGH asked whether higher operating costs
and increased transportation costs were factors in the closure
of the Kenai plant.
MR. CLARK recalled that 40 years ago the Kenai plant was the
only source of LNG exported to Japan, but is now less than one-
half of 1 percent of that supply. Regarding costs, he said
there are multiple components in the economics of the business
climate; generally, the smaller the plant, the higher the cost
per unit. In further response to Representative Fairclough, he
said the capacity of the Kenai plant is about 230 million cubic
feet per day, which at the time was of significant size, but
"nowadays, plants are built much bigger."
10:53:19 AM
REPRESENTATIVE FAIRCLOUGH asked whether the taxing structure has
anything to do with the formula for ConocoPhillips's return on
investment that caused the facility to be closed, rather than
securing another market.
MR. CLARK noted that taxes are an element when looking at the
value of production; however, taxes are very low in the Cook
Inlet thus the tax system was not a hindrance.
10:54:28 AM
CHAIR HERRON said, "Some have characterized this as a silver
lining. Do you agree?"
MR. CLARK stated his company has articulated the benefits of
keeping the plant open, particularly during the winter months;
in fact, he opined, "What I would say is I think there's many
benefits to the plant operating ...."
10:55:38 AM
REPRESENTATIVE KELLER said he did not understand why, when there
are shortages in the supply of natural gas in Southcentral, that
producing wells are being shut down. The plant is connected
to the supply grid so it would have a market for its gas there.
10:56:24 AM
MR. CLARK explained that the local market in Southcentral is
highly cyclical, thus the demand on a summer day can be 12 times
less than it is on a winter day. The gas literally has no place
to go in the summer. Conversely, there could be a shortage on a
peak winter day. Until there is an underground storage facility
that gas can be injected into during the summer to "flatten out
the demand," there is nothing that can be done. In further
response to Representative Keller, he clarified that there is
some producer-owned underground storage available now, but the
project for storage with open access by third parties is not
expected until 2012.
10:58:42 AM
REPRESENTATIVE TUCK asked whether the ConocoPhillips export
sales contract was with a single contract.
MR. CLARK answered that the current contract is a joint contract
with Marathon and ConocoPhillips to jointly sell LNG to Tokyo
Electric Power Company (TEPCO) and Tokyo Gas Co. Ltd. In
further response to Representative Tuck, he said these companies
have purchased the LNG exported from the Kenai plant exclusively
for over 40 years, with the exception of a single cargo sold to
a facility in Sakhalin, Russia.
10:59:58 AM
REPRESENTATIVE TUCK asked for the duration of the present
contracts with TEPCO and Tokyo Gas.
MR. CLARK said the contracts have matched the dates of the
export licenses.
11:00:37 AM
REPRESENTATIVE TUCK clarified that he wanted to know about the
duration of contracts with suppliers other than ConocoPhillips
and Marathon.
MR. CLARK said he was unsure, but he opined they typically
secure supplies for longer periods of time.
11:01:08 AM
REPRESENTATIVE TUCK pointed out the difficulties caused by a
license limited to two-year increments such as keeping a plant
going, responding to price forecasts, plant maintenance, and
shorter contracts.
REPRESENTATIVE KELLER questioned whether ConocoPhillips was
required to pay taxes on the gas reserves after a well is shut
down, and the affects thereof.
11:01:58 AM
MR. CLARK explained his company pays production taxes - if there
is no production, there are no taxes.
REPRESENTATIVE GARDNER asked whether ConocoPhillips has
contracts with TEPCO and Tokyo Gas to supply gas produced
elsewhere.
11:02:41 AM
MR. CLARK said yes, from the facility in Australia.
CHAIR HERRON requested Mr. Clark's opinion on the closure's
effect on gas storage.
MR. CLARK observed that the LNG plant has served to store gas
until it was needed. That capability will not be available next
winter - this highlights the urgency of the storage project.
11:04:13 AM
JANIS WILSON, Commissioner, Regulatory Commission of Alaska,
informed the committee the RCA has no regulatory authority over
the LNG plant or any of its transactions. In fact, the Federal
Energy Regulatory Commission (FERC) has recently asserted
jurisdiction over the plant and the U.S. Department of Energy
has the regulatory jurisdiction to approve or deny the export
license. She relayed the concern expressed by Southcentral
utilities over the closure because they have been using the
plant as gas storage during the winter. That is the most
critical element of the situation from the RCA's point of view.
11:05:58 AM
CHAIR HERRON asked Ms. Wilson to comment on the long decision-
making process related to gas in Southcentral.
MS. WILSON said the RCA process for approving gas contracts is
dependent upon whether the contracts are contested by parties
interested in participating in a litigated hearing. If there
are no protests, contracts are approved routinely and quickly.
In addition, the RCA is directed by statutory timelines that
have been in place since 2003.
11:07:15 AM
CHAIR HERRON questioned whether the Southcentral energy supply
is considered to be a problem by producers, the utilities, and
the RCA.
11:07:32 AM
MS. WILSON said that question is better answered by the
utilities as the RCA does not contract for gas, but serves as
"the approving body, once the gas is contracted for." In
further response to Chair Herron, she agreed that the RCA is an
"impartial observer."
11:08:13 AM
REPRESENTATIVE FAIRCLOUGH recalled she was serving on the
Anchorage assembly at the time two uncontested commitments were
turned down by the RCA. Furthermore, her experience is that RCA
commissioners have taken a stand for or against a particular
issue. She asked which entity objected to the contract with
Marathon that was denied based on the price to the consumer.
Representative Fairclough clarified that ENSTAR and other
utilities were before the RCA asking to secure 20-year contracts
for Southcentral.
11:09:39 AM
MS. WILSON responded that in 2006 a Marathon contract was
opposed by Regulatory Affairs & Public Advocacy (RAPA), Civil
Division, Department of Law (DOL), the Tesoro Corporation, and a
consumer.
11:10:15 AM
CHAIR HERRON asked Ms. Wilson to supply complete information
about this issue in written form.
11:10:28 AM
REPRESENTATIVE OLSON observed that there have been three years
with serious LNG shortages, and outages were prevented only by
ConocoPhillips - with the approval of its customers -
voluntarily diverting partial shipments of LNG.
11:11:42 AM
COLLEEN STARRING, President, ENSTAR Natural Gas Company, advised
that one of the contracts mentioned by Representative Fairclough
was a 10-year commitment with Marathon that would have provided
ENSTAR sufficient gas until 2016. The parties that objected
were Tesoro and RAPA, and the fact that the contract was tied to
Henry Hub pricing mechanisms influenced a close vote by the RCA
commissioners not to approve. Also, in 2007-2008, a
ConocoPhillips and Marathon five-year contract was not approved.
Subsequently, in order to obtain gas during the peak winter
months, ENSTAR has used shorter contracts and different pricing
scenarios.
11:13:57 AM
CARRI LOCKHART, Asset Team Manager, Marathon Oil Corporation,
recognized that the plant has a long and important history in
Alaska and its closure is difficult on its employees and the
community; however, Marathon has storage mechanisms to provide
flexibility, thus its operations are not impacted. She advised
that supply was a factor in the decision, but that Marathon can
continue to meet its contractual obligations.
11:15:04 AM
CHAIR HERRON then asked Mr. Clark whether there was a
possibility that the plant would be sold to the utilities that
purchase its product.
MR. CLARK expressed his company's intent to secure the plant and
consider all options and offers.
11:16:09 AM
REPRESENTATIVE GARDNER asked whether use of the storage
facilities was possible.
MR. CLARK explained that in order to use the LNG tanks for
storage, an investment for re-gasification heaters would need to
be made. In conclusion, he noted that Marathon and
ConocoPhillips have a slightly different perspective on the
closure, and restated his company's commitment to help its
affected employees and to meet its local supply commitments.
11:17:52 AM
The committee took an at-ease from 11:17 a.m. to 11:18 a.m.
11:18:04 AM
HB 67-FILM PRODUCTION TAX CREDIT
11:21:17 AM
CHAIR HERRON announced that the next order of business would be
HOUSE BILL NO. 67, "An Act relating to transferable film
production tax credits; and providing for an effective date by
amending the effective dates of secs. 3 and 4, ch. 63, SLA
2008."
REPRESENTATIVE FOSTER introduced Amendment 2, labeled 27-
LS0356\A.2, Bullock, 2/14/11, which read:
Page 2, following line 5:
Insert a new bill section to read:
"* Sec. 4. AS 44.33.235(c) is amended to read:
(c) In determining the amount of the tax credit,
the percentage provided by (b) of this section shall
be increased by the film office based on the following
criteria:
(1) an additional 10 percent of qualified
expenditures that are wages paid to Alaska residents;
(2) an additional four [TWO] percent of
qualified expenditures made in a rural area; and
(3) an additional two percent of qualified
expenditures made in the state between October 1 and
March 30."
Renumber the following bill sections accordingly.
REPRESENTATIVE FOSTER explained the purpose of the amendment is
to increase the tax credit for the rural area incentive from 2
percent to 4 percent. He said this will address the additional
operational costs and logistical issues incurred when filming in
communities of rural Alaska.
11:22:48 AM
REPRESENTATIVE OLSON introduced Amendment 3 labeled 27-
LS0365\A.3, Bullock, 2/14/11, which read:
Page 3, following line 9:
Insert a new bill section to read:
"* Sec. 5. AS 44.33.239(7) is amended to read:
(7) "rural area" means a community with a
population of 1,500 or less or a community with a
population of 6,500 [5,500] or less that is not
connected by road or rail to Anchorage or Fairbanks."
Renumber the following bill sections accordingly.
REPRESENTATIVE OLSON explained the purpose of the amendment is
to increase the population of an identified rural area from
5,500 to 6,500.
11:23:21 AM
CHAIR HERRON opened public testimony.
11:23:40 AM
PETE KALAMARIDES said he was the local captain on the movie
Everybody Loves Whales, and was employed with a crew of 30-40
others. Mr. Kalamarides expressed his support of the bill and
the proposed amendment, because the movie was a very good
economic stimulus for Anchorage, and the cast was welcomed
throughout town.
11:24:43 AM
CINDY DRAPER, Rentals Manager, ABC Motorhome and Car Rental,
Inc., said her company rented motorhomes during the filming of
Ghost Vision and Everybody Loves Whales. These contracts added
over 1,500 additional rental days to their rental season and
made a "significant boost to, you know, a fairly small company."
Ms. Draper said she was in favor of extending the tax credits.
11:25:41 AM
BRICE HABERGER informed the committee he is a life-long Alaskan.
He referred to his past testimony on legislation supporting the
creation of jobs. Mr. Haberger worked on Everybody Loves Whales
as a production scout and as a grip on Ghost Vision. He
expressed his belief that the bill will allow Alaska to grow a
crew base that will rival that of any other state, and one that
is technically proficient and knowledgeable. He pointed out
that the private sector has begun training Alaska residents for
work in this industry.
11:28:03 AM
REPRESENTATIVE FOSTER asked whether Mr. Haberger had seen the
films screened at the Alaska Federation of Natives (AFN) events.
MR. HABERGER said no.
11:28:21 AM
REPRESENTATIVE FOSTER urged support for the work done for AFN by
students in the Lower Yukon region, and other areas of rural
Alaska.
REPRESENTATIVE TUCK asked how much work the two productions
generated.
11:28:52 AM
MR. HARBEGER said he worked for about one week on each
production. In further response to Representative Tuck, he
explained that after graduating from college in film, his
classmates looked for work in Los Angeles, but he is pursuing
his career in Alaska.
11:30:09 AM
TED SMITH said he was a member of the cast of On the Ice, a
movie that was filmed in Barrow. The movie was screened at the
Sundance Film Festival and received excellent reviews. Mr.
Smith said he was in favor of the bill, because movies create an
opportunity to introduce the cultures of rural Alaska.
11:31:47 AM
GARY ZIMMERMAN, General Manager-Statewide, Avis Rent-A-Car
(Avis), stated his company employs 110 residents across the
state and is in favor of HB 67. There is a benefit to all
facets of the economy from filming movies on location. He
pointed out that a portion of his company's revenue is the state
vehicle rental tax that goes to the state, and the municipal
taxes that support communities. Mr. Zimmerman opined that
Alaska needs to diversify its economy through a long-term
commitment to the film industry.
11:34:27 AM
MAYA SALGANAK, Assistant Professor of Film/Video Arts, Director
of Film Studies, University of Anchorage Fairbanks, said her
responsibility is to help guide students interested in working
in the film industry. The University of Alaska (UA) Board of
Regents is reviewing a proposal on whether to begin a Bachelor
of Arts (BA) degree program in film by 2013. Since the
establishment of the Alaska Film Office, Division of Economic
Development, Department of Commerce, Community & Economic
Development (DCCED), there has been amazing growth in film and
she has been able to place students with dozens of film
companies from all over the world. Students have worked in
television commercials and feature films, in venues from
Anchorage to Barrow, and the program has received funding from
various sources. Student enrollment in the UAF film program and
related courses has grown by 60 percent in the last four years.
Ms. Salganek said tax credits are the first consideration when
the film industry decides on a location; in fact, without the
incentive program the long-term growth of the industry is
threatened, even if the university supports the availability of
film crews through a BA program. She advised that extending the
incentive program will solidify the state's ability to bring a
"full-force infrastructure into the state."
11:37:36 AM
GREG KESSLER, Alaska Commercial Director, Totem Ocean Trailer
Express, Inc. (TOTE), stated that in the past year his company
shipped cargo for two productions, Everybody Loves Whales and
Ghost Vision. In fact, TOTE moved about 35 shipments north and
south for the movie production companies, and is in the
preparation stages for future shipments. His company and others
will benefit from the reauthorization of the tax credits, which
will continue to make Alaska an attractive place for the film
industry, and bring new and diversified business opportunities
to the state.
11:39:38 AM
KAREN TALLENT, Studio Teacher, said she worked on three film
projects as a studio teacher. As required by state law, a
studio teacher provides education for, and ensures the legal
protection and safety of, minors who are involved in the
entertainment industry. Ms. Tallent expressed her support of
the bill saying her experience was that the film industry
provides jobs for film crews, economic opportunities, and
marketing promotion for Alaska tourism, products, and
businesses. She is now a studio teacher full-time because of
the increased interest in filming in Alaska due to the tax
credits. Forty-five other states, Canada, and other countries
have incentive programs in place and it is important for Alaska
to have a viable and competitive program. Ms. Tallent saw at
least 100 crew and 2,000 extras employed in Everybody Loves
Whales and related that the out-of-state cast shopped and
traveled while in Alaska. She concluded the film industry is a
multi-million dollar industry that will diversify the economy,
provide jobs, and increase tourism.
11:45:02 AM
[HB 67 was heard and held.]
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Economic Development, International Trade
and Tourism meeting was adjourned at 11:45 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| EDT - News Items on Pending Kenai LNG Plant Closure.pdf |
HEDT 2/15/2011 10:15:00 AM |
|
| EDT - LNG Plant Closure Hearing - List of Participants.pdf |
HEDT 2/15/2011 10:15:00 AM |
|
| HB 67 - Letters of Support 021411.pdf |
HEDT 2/15/2011 10:15:00 AM |
HB 67 |
| EDT 2.15.11 RCA Response to Committee Inquiry Cook Inlet Gas Contracts.pdf |
HEDT 2/15/2011 10:15:00 AM |