Legislature(2011 - 2012)BARNES 124

02/21/2012 10:15 AM House ECON. DEV., TRADE & TOURISM


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10:25:22 AM Start
10:26:03 AM Presentation: Southeast Integrated Resource Plan: Available Resources and Benefits of Wood-fired Boilers
11:14:26 AM Presentation: International Trade Update, World Trade Center Alaska
11:14:58 AM Presentation: Southeast Integrated Resource Plan: Available Resources and Benefits of Wood-fired Boilers
11:15:56 AM Presentation: International Trade Update, World Trade Center Alaska
11:49:15 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Presentations:
+ Southeast Integrated Resource Plan: Available TELECONFERENCED
Resources and Benefits of Wood-fired Boilers by
- Devany Plentovich, AEA Biomass Program Manager
- Jim Strandberg, AEA Project Manager
- Tony SlatonBarker, PE, Program Manager,
Alternative Energy, Coffman Engineers
- Thomas Deerfield, Biomass Consultant,
Dalson Energy
+ International Trade Update by Greg Wolf, TELECONFERENCED
Executive Director, World Trade Center Alaska
                    ALASKA STATE LEGISLATURE                                                                                  
 HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, INTERNATIONAL                                                               
                       TRADE AND TOURISM                                                                                      
                       February 21, 2012                                                                                        
                           10:25 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bob Herron, Chair                                                                                                
Representative Neal Foster                                                                                                      
Representative Reggie Joule                                                                                                     
Representative Wes Keller                                                                                                       
Representative Steve Thompson                                                                                                   
Representative Berta Gardner                                                                                                    
Representative Chris Tuck                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Kurt Olson, Vice Chair                                                                                           
Representative Cathy Engstrom Munoz                                                                                             
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                              
Representative Bob Miller                                                                                                       
                                                                                                                                
Senator Linda Menard                                                                                                            
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION:  SOUTHEAST INTEGRATED RESOURCE PLAN:  AVAILABLE                                                                   
RESOURCES AND BENEFITS OF WOOD-FIRED BOILERS                                                                                    
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PRESENTATION:  INTERNATIONAL TRADE UPDATE~ WORLD TRADE CENTER                                                                   
ALASKA                                                                                                                          
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JIM STRANDBERG, Project Manager                                                                                                 
Southeast Integrated Resource Plan                                                                                              
Alaska Energy Authority (AEA)                                                                                                   
Department of Commerce, Community & Economic Development (DCCED)                                                                
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    Gave introductory  remarks  preceding  the                                                            
presentation on the  economics of biomass fuel  within the context                                                              
of the Southeast Integrated Resource Plan.                                                                                      
                                                                                                                                
DEVANY PLENTOVICH, Program Manager                                                                                              
Biomass in Combined Heat and Power                                                                                              
Alaska Energy Authority (AEA)                                                                                                   
Department of Commerce, Community & Economic Development (DCCED)                                                                
Anchorage, Alaska                                                                                                               
POSITION   STATEMENT:     Provided   a   PowerPoint   presentation                                                            
entitled,  "Southeast Integrated  Resource Plan  - SEIRP  Economic                                                              
Drivers for Biomass in SE Alaska."                                                                                              
                                                                                                                                
TONY SLATONBARKER, PE                                                                                                           
Program Manager                                                                                                                 
Alternative Energy and Sustainability                                                                                           
Coffman Engineers                                                                                                               
Anchorage, Alaska                                                                                                               
POSITION   STATEMENT:     Provided   a   PowerPoint   presentation                                                            
entitled, "Biomass Boiler Heating Systems," dated 2/21/12.                                                                      
                                                                                                                                
THOMAS DEERFIELD, Independent Biomass Energy Specialist                                                                         
Dalson Energy, Inc.                                                                                                             
Anchorage, Alaska                                                                                                               
POSITION   STATEMENT:     Provided   a   PowerPoint   presentation                                                            
entitled, "Biomass Energy Fundamentals," dated February, 2012.                                                                  
                                                                                                                                
DAVE STANCLIFF, Vice President                                                                                                  
Tok Chamber of Commerce                                                                                                         
Tok, Alaska                                                                                                                     
POSITION  STATEMENT:   Speaking on  behalf of  the Tok Chamber  of                                                            
Commerce, gave comments on the biomass boiler at the Tok School.                                                                
                                                                                                                                
GREG WOLF, Executive Director                                                                                                   
World Trade Center Alaska (WTCAK)                                                                                               
Anchorage, Alaska                                                                                                               
POSITION   STATEMENT:     Provided   a   PowerPoint   presentation                                                            
entitled,   "Alaska's  Place  in   the  World:     An   Update  on                                                              
International Trade," dated 2/21/12.                                                                                            
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
10:25:22 AM                                                                                                                   
                                                                                                                                
CHAIR BOB  HERRON called the  House Special Committee  on Economic                                                            
Development, International  Trade and Tourism meeting  to order at                                                              
10:25 a.m.   Representatives  Herron, Keller,  Tuck, and  Thompson                                                              
were  present  at the  call  to  order.   Representatives  Foster,                                                              
Gardner,  and  Joule  arrived  as the  meeting  was  in  progress.                                                              
Representative Miller and Senator Menard were also present.                                                                     
                                                                                                                                
^PRESENTATION:   Southeast  Integrated Resource  Plan:   Available                                                              
Resources and Benefits of Wood-fired Boilers                                                                                    
 PRESENTATION:  Southeast Integrated Resource Plan:  Available                                                              
          Resources and Benefits of Wood-fired Boilers                                                                      
                                                                                                                              
10:26:03 AM                                                                                                                   
                                                                                                                                
CHAIR HERRON announced  that the first order of  business would be                                                              
the first  of four speakers on  biomass and the benefits  of wood-                                                              
fired boilers.                                                                                                                  
                                                                                                                                
10:26:31 AM                                                                                                                   
                                                                                                                                
JIM  STRANDBERG, Project  Manager,  Southeast Integrated  Resource                                                              
Plan,  Alaska  Energy Authority  (AEA),  Department  of  Commerce,                                                              
Community   &  Economic   Development   (DCCED),  introduced   the                                                              
presentation on  the economics of  biomass as an  alternative fuel                                                              
within  the context  of  the  Southeast Integrated  Resource  Plan                                                              
(SEIRP).  Mr.  Strandberg said SEIRP is an integrated  analysis of                                                              
heating  and  electric power  needs  for  Southeast Alaska.    The                                                              
draft plan  proposes the use of  alternative energy to  bring down                                                              
the cost of heating  and to control the growth  of electric demand                                                              
in Southeast  Alaska,  and is designed  to serve  as a  foundation                                                              
for economic  development and revitalization.   The  results could                                                              
apply to other parts  of the state.  He stressed  that AEA and the                                                              
public  are reviewing  the draft  document with  the final  report                                                              
expected in April.                                                                                                              
                                                                                                                                
10:29:08 AM                                                                                                                   
                                                                                                                                
DEVANY PLENTOVICH,  Program Manager, Biomass in Combined  Heat and                                                              
Power, AEA,  DCCED, stated  the intent of  the presentation  is to                                                              
acquaint the committee  with the economic drivers that  led to the                                                              
recommendations for  biomass in SEIRP.   The current  situation is                                                              
a trend toward residences - and many commercial establishments -                                                                
switching from  fuel oil  heat to  electric space heating  because                                                              
fuel  oil  prices  are  rising,  and  the  cost  of  hydroelectric                                                              
(hydro)    generated    electricity     has    remained    stable.                                                              
Unfortunately,  the   increase  in  demand  for   hydro  generated                                                              
electricity  has   depleted  reserve  hydro  to   the  point  that                                                              
utilities are using  diesel generation to supplement  hydro during                                                              
the winter, which  causes higher prices for everyone.   To address                                                              
this  issue,   Black  &  Veatch,   AEA's  consultants   on  SEIRP,                                                              
developed   recommendations.     Ms.   Plentovich  discussed   the                                                              
qualities of  electricity, noting  electricity is the  only choice                                                              
for lighting, appliances,  and motors, but that  space heating can                                                              
also be  generated by  coal, fuel oil,  natural gas,  and biomass.                                                              
Black & Veatch's  analysis indicated strong economic  benefits for                                                              
biomass,  especially  considering  that in  Southeast  Alaska,  75                                                              
percent of an  average family's energy cost is  for space heating.                                                              
From an  economic standpoint, analysis  revealed that  the payback                                                              
of  recent pellet  heating  conversions in  Southeast  is four  to                                                              
seven years;  for example, the  Sealaska building  conversion will                                                              
be about a  four and one-half year  payback, the Kake  school - if                                                              
funded - will be  about a six to seven year payback,  and the U.S.                                                              
Coast Guard  air station in Sitka  - if converted - will  be about                                                              
a five year  payback.  Although  there is not a lot  of experience                                                              
with  pellets, AEA  will  continue to  monitor  the operation  and                                                              
performance  of  these  systems  to ensure  converting  to  pellet                                                              
heating is  the right  economic decision.   The cost  of importing                                                              
pellets  from the  Pacific Northwest  is  similar to  the cost  of                                                              
hydro, and  up to one-half of the  cost of diesel fuel.   Further,                                                              
the maintenance  and operation  of pellet  boilers are  similar to                                                              
that  of oil  boilers.    She pointed  out  there  is an  economic                                                              
development  opportunity  of manufacturing  pellets  locally  from                                                              
sawmill waste  or wood  from the  Healthy Forest Initiative,  U.S.                                                              
Forest Service, U.S. Department of Agriculture.                                                                                 
                                                                                                                                
10:33:16 AM                                                                                                                   
                                                                                                                                
MS. PLENTOVICH  said AEA studied  the Black & Veatch  analysis and                                                              
determined the  potential impact  of its recommendations  over the                                                              
next five  years on the three  communities of Juneau,  Angoon, and                                                              
Craig.  Slide  4 displayed the impact  on Angoon:  In  Angoon, the                                                              
average family  now pays about $350  per month for  space heating.                                                              
If SEIRP is  fully implemented - including hydro  and transmission                                                              
projects, energy  efficiency, demand side management,  and biomass                                                              
for  heating -  by  2016,  the family's  cost  would  be $183  per                                                              
month.  If  nothing is done,  the family's cost increases  to $426                                                              
per  month.   Slide 5  displayed the  same analysis  for Craig  on                                                              
Prince of  Wales (POW) Island:   In Craig, the average  family now                                                              
pays about  $273 per month for space  heating.  If SEIRP  is fully                                                              
implemented, in  2016, the family's  cost would be about  $183 per                                                              
month.  If  nothing is done,  the family's cost increases  to $417                                                              
per month.    Slide 6 displayed the same analysis  for Juneau:  In                                                              
Juneau, the  average family  now pays  about $225  per month.   If                                                              
SEIRP is  fully implemented, in  2016, the family's cost  would be                                                              
$129 per month.   If nothing is done, the family's  cost increases                                                              
to $312  per month.   She  then compared  the emissions  of pellet                                                              
boilers to  other fuels:  lower  dioxide and net  greenhouse gases                                                              
than  oil  and  propane;  higher  particulate  matter  and  carbon                                                              
dioxide, although  there have been improvements  through two-stage                                                              
combustion and  emissions controls.   From maintenance  experience                                                              
with Sealaska's  boiler, she  advised that  five minutes  per week                                                              
are required to  check on the boiler, every two to  three months a                                                              
drum of  nontoxic ash  is removed,  and an  annual inspection  and                                                              
cleaning  is  conducted  in  the  summer.    Also,  the  favorable                                                              
economics  of biomass  in  SEIRP are  based  on imported  pellets;                                                              
however,  if  there were  a  large  demand in  Southeast,  pellets                                                              
could  be manufactured  locally,  as  is soon  to  occur in  North                                                              
Pole.                                                                                                                           
                                                                                                                                
10:38:01 AM                                                                                                                   
                                                                                                                                
CHAIR HERRON asked who manufactures pellets in Alaska.                                                                          
                                                                                                                                
MS.  PLENTOVICH   said  there  are  small  pellet   facilities  in                                                              
Ketchikan  and Petersburg.   A  large  manufacturer would  produce                                                              
about 30,000 tons per year and would employ about 25 workers.                                                                   
                                                                                                                                
REPRESENTATIVE  KELLER clarified that  the full implementation  of                                                              
SEIRP is  with imported pellets.   He pointed out that  wood chips                                                              
are less expensive.                                                                                                             
                                                                                                                                
MS.  PLENTOVICH  said  correct.  The  SEIRP  recommendations  from                                                              
Black  &  Veatch  are  based on  the  cost  of  imported  pellets;                                                              
local manufacturing  is an opportunity  for the future  once there                                                              
is sufficient demand.                                                                                                           
                                                                                                                                
10:39:54 AM                                                                                                                   
                                                                                                                                
MR. STRANDBERG  added that  "the approach  was really  designed to                                                              
give a conservative  economic analysis of the pellet  option."  He                                                              
assured  the committee  there is  a  large market  outside of  the                                                              
U.S.  for pellets.    He restated  the goal  of  bringing jobs  to                                                              
Alaska with pellet manufacturing.                                                                                               
                                                                                                                                
REPRESENTATIVE  THOMPSON asked  whether there  was a  manufacturer                                                              
in Southcentral.                                                                                                                
                                                                                                                                
MS. PLENTOVICH  understood the  plant in North  Pole is  the first                                                              
of a large scale.                                                                                                               
                                                                                                                                
10:41:09 AM                                                                                                                   
                                                                                                                                
CHAIR HERRON  asked how much  the transportation cost  for pellets                                                              
is from the Pacific Northwest to Southeast.                                                                                     
                                                                                                                                
MS. PLENTOVICH  estimated  pellets in the  Pacific Northwest  cost                                                              
about $150  per ton, but pellets  in bulk cost about $250  per ton                                                              
in   Southeast,  thus   40  to   50   percent  of   the  cost   is                                                              
transportation.                                                                                                                 
                                                                                                                                
CHAIR  HERRON observed  that Southeast  has wood,  and asked  when                                                              
the region could manufacture pellets.                                                                                           
                                                                                                                                
10:42:44 AM                                                                                                                   
                                                                                                                                
MR. STRANDBERG  said he was unsure  because it depends  on actions                                                              
taken by  the region and  the abilities  of the private  sector to                                                              
develop that sort of industry.                                                                                                  
                                                                                                                                
REPRESENTATIVE  JOULE asked  whether  access to  the resource  for                                                              
pellets is a problem.                                                                                                           
                                                                                                                                
MR. STRANDBERG said  yes.  That is a significant  problem, and the                                                              
ability to  harvest timber  is a major  issue in Southeast  Alaska                                                              
and a key driver in the ability to develop local industries.                                                                    
                                                                                                                                
10:44:00 AM                                                                                                                   
                                                                                                                                
TONY  SLATONBARKER, PE,  Program Manager,  Alternative Energy  and                                                              
Sustainability,  Coffman Engineers,  said  his presentation  would                                                              
be more specific  about the installation and operation  of pellet,                                                              
chip, and  cord wood  boiler systems, and  noted that  the variety                                                              
of systems means  one is not limited to biomass  energy production                                                              
because there is not  a source of pellets.  Slide 1  was a list of                                                              
the  types  of  systems:  residential  or  commercial;  individual                                                              
facilities  or central  boilers  with a  distribution system;  and                                                              
cord  wood, hog  fuel, pellets,  or wood  chips.   One of the  key                                                              
components of  the systems  is the fuel  source and its  quality -                                                              
pellets  are  very  uniform  and  make  the  systems  run  better.                                                              
Access  to fuel  is also  a  factor; in  fact,  in Delta  Junction                                                              
there is  a proposal  to grow and  burn barley.   Pellets  must be                                                              
manufactured  to certain  specifications  for boilers.   Slides  4                                                              
through  8 displayed  options for  pellet and  wood chip  delivery                                                              
and storage systems.                                                                                                            
                                                                                                                                
10:47:47 AM                                                                                                                   
                                                                                                                                
MR. SLATONBARKER  explained slide 10  was a diagram of  the layout                                                              
of the cord wood  boilers at Thorne Bay, including  a wood storage                                                              
facility and  boiler rooms.   Slide 11 was  a photo of  the layout                                                              
in Delta  Greely with  a large, separate  building for  the boiler                                                              
and for  chip storage.   Delivery  methods from  storage into  the                                                              
boiler  room  were  by  auger  or   conveyor  belt.      Slide  14                                                              
illustrated  a standard simple  system of  pellet delivery  from a                                                              
silo  to the  boiler,  and with  ash  deposited  into the  bottom.                                                              
Slide 15  illustrated Chiptec  high tech  controls similar  to the                                                              
installation  in Tok.   The  Chiptec controls  monitor pumps,  the                                                              
burn chamber,  gasification, flow  rates, temperatures,  and fans.                                                              
Slide 17  pictured three  boiler systems:  gasification,  which is                                                              
heated wood  that produces gas and  generates hot water  or steam;                                                              
a  prefabricated  GARN  unit;  and a  larger,  chip  wood  system.                                                              
Further  describing  the systems,  he  said the  process  produces                                                              
flue gas from  which particulates must be removed,  and stacks are                                                              
usually 30  to 50 feet tall.   Combustion in the boilers  is above                                                              
85 percent  so there is  not a lot  of ash.  Ash  can be put  in a                                                              
landfill  or used  for farming.   Slides  22 and  23 pictured  the                                                              
outside  and inside  of the Delta  Greely High  School boiler  and                                                              
storage building.   Slides 24 and  25 pictured wood  chips storage                                                              
options, such as an exterior silo, bins, and covered storage.                                                                   
                                                                                                                                
10:53:13 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE THOMPSON  asked whether cord wood  systems are more                                                              
labor intensive.                                                                                                                
                                                                                                                                
MR.  SLATONBARKER indicated  yes,  the cord  wood  must be  loaded                                                              
three to  four times  per day.   They are  also different  in that                                                              
the GARN  boiler  has a large  water tank  that is  heated by  the                                                              
burning wood,  and which  then stores  hot water  for a  matter of                                                              
hours.   In further response  to Representative Thompson,  he said                                                              
he did  not know how the  cost of barley  compared to the  cost of                                                              
pellets.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  GARDNER  asked  whether  it  is  practical  for  a                                                              
homeowner with  a fuel oil system  to add a pellet  heating system                                                              
and switch back and forth.                                                                                                      
                                                                                                                                
MR. SLATONBARKER advised  that in a system piped with  hot water a                                                              
pellet  system  could be  installed  side  by  side.   In  further                                                              
response to Representative  Gardner, he said he was  unsure of the                                                              
cost of such an installation.                                                                                                   
                                                                                                                                
REPRESENTATIVE   THOMPSON   related  his   daughter's   successful                                                              
experience with a pellet stove.                                                                                                 
                                                                                                                                
10:56:43 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  TUCK recalled  the installation  of the wood  chip                                                              
boiler in  Tok served the dual  purpose of providing  biomass heat                                                              
and  of   clearing  the  land   to  protect  the   community  from                                                              
wildfires.   He  noted SEIRP  generated mixed  feelings about  the                                                              
biomass recommendation  because Southeast  has hydro,  in addition                                                              
to wood, and  future industry development was not  included in the                                                              
plan.   Previous  testimony  to  the  House Special  Committee  on                                                              
Energy informed him  of the use of barley pellets  in rural Alaska                                                              
and he expressed his interest in longer-ranging technology.                                                                     
                                                                                                                                
10:59:03 AM                                                                                                                   
                                                                                                                                
THOMAS DEERFIELD,  Independent Biomass  Energy Specialist,  Dalson                                                              
Energy,  Inc.,   said  his  presentation  would   be  an  advocacy                                                              
presentation.  The  status quo for Alaska is 10,000  years of wood                                                              
energy  and 60  years  of fossil  fuel  energy in  the  form of  a                                                              
"thermostat  culture."   Mr. Deerfield  advised  that fossil  fuel                                                              
systems  do  not  require  local   and  rural  jobs,  and  instead                                                              
maintain dependencies  that are  unsustainable.  He  opined fossil                                                              
fuel  costs are  going  up and  rural communities  are  completely                                                              
dependent  on  imported  fossil  fuels delivered  to  tank  farms.                                                              
Conversely,  biomass  energy is  about  local fuels  which  create                                                              
local jobs and  job training, and builds sustainable  economies in                                                              
Bush,  rural,  and  urban  communities.    However,  building  the                                                              
needed long-term,  sustainable, and renewable  fuel infrastructure                                                              
will take a  long time, but the  cost is reasonable when  the cost                                                              
of oil  is at $3  or $4 and  up per gallon.   He also  pointed out                                                              
the  benefit of  wildfire risk  reduction, comparing  the cost  of                                                              
$10,000  to $20,000  per acre  to fight  a fire,  with $1,200  per                                                              
acre to  thin and  remove the  small trees  that are not  suitable                                                              
for lumber.   The benefits also include the  economic localization                                                              
of  jobs  for harvesting,  processing,  and  running  the  biomass                                                              
plant.                                                                                                                          
                                                                                                                                
11:03:54 AM                                                                                                                   
                                                                                                                                
MR. DEERFIELD  displayed slide  3 which  listed the categories  of                                                              
scale  for:   cord  wood,  pellet, and  wood  chip  systems.   The                                                              
choice  of system  is dependent  upon the  size of  the load;  for                                                              
example, cord  wood systems make  a lot of  sense for loads  up to                                                              
500,000  British thermal  units (Btu)  per hour;  small and  large                                                              
commercial   buildings   are  suited   to   pellet  systems;   and                                                              
industrial  facilities  and  schools  are  suited  for  wood  chip                                                              
systems.  The choice  is also dependent upon the  kinds of biomass                                                              
available  and local  labor.   As an  aside he  said, "It  matters                                                              
less ... where  the pellets come  from as we get started."   Slide                                                              
4 indicated  trends in  the Lower  48:   Vermont and Montana  have                                                              
directly  subsidized successful  wood chip  or pellet systems  for                                                              
schools,  and there is  some support  for biomass  heat in  all of                                                              
the other  states.    In Canada,  the Northwest Territories  (NWT)                                                              
is using  12,000 tons per  year of pellets  due to  its commitment                                                              
four  years  ago   to  support  biofuels,  and   has  reduced  its                                                              
dependency  on foreign oil  fuel for  heat by  70 percent.   Yukon                                                              
Territory is following  the NWT model.  British  Columbia produces                                                              
over 1  million tons  of pellets per  year - most  of which  go to                                                              
Sweden -  from beetle-killed trees.   Mr. Deerfield  observed that                                                              
Alaska also  has a source of  pellets from beetle-killed  trees in                                                              
the boreal  forest.  He  advised that the  European Union  (EU) is                                                              
about  30 years  ahead  of the  U.S.  in recognizing  that  fossil                                                              
fuels are  finite and renewable  fuels are sustainable  long-term.                                                              
The EU is  using 10 million tons  of pellets per year  and expects                                                              
growth to 100 million tons per year.                                                                                            
                                                                                                                                
11:07:31 AM                                                                                                                   
                                                                                                                                
MR. DEERFIELD continued  to slide 5, entitled,  "Lessons Learned."                                                              
After  five years of  experience  in Alaska,  it has been  learned                                                              
that wind  power works  well on  the coast,  but is  intermittent,                                                              
and difficult  to integrate with  small diesel generation.   Solar                                                              
power is also  intermittent and seasonal in Alaska.   Hydrokinetic                                                              
is pre-commercial,  and small hydroelectric works  really well but                                                              
is very  expensive.  He concluded  that biomass is  available here                                                              
and  now,   creates  more  local   jobs,  is  low  tech,   and  is                                                              
sustainable.    Slide  6  listed  biomass  "rough"  costs:    pre-                                                              
feasibility  studies  to  look   at  sites,  $25,000;  feasibility                                                              
studies,  $50,000  to  $500,000;   high  efficiency  low  emission                                                              
(HELE)  cordwood systems  are more  expensive; residential  pellet                                                              
system, $3,000  to $4,000;  commercial pellet  system, $20,000  to                                                              
$100,000;  wood  chip systems,  $2,500,000  to $4,000,000.    Cord                                                              
wood systems  create jobs because  the wood is manually  processed                                                              
and  fed, whereas  pellet  systems are  automated  and have  lower                                                              
capital costs,  although the fuel  costs more.  Wood  chip systems                                                              
have  lower  costs  for  fuel,  although  the  capital  costs  are                                                              
higher.   In all cases,  there is a  lower cost per  delivered Btu                                                              
than any  other form of  energy in Alaska,  except for  the nearby                                                              
natural gas in the Anchorage bowl.                                                                                              
                                                                                                                                
11:10:04 AM                                                                                                                   
                                                                                                                                
DAVE  STANCLIFF,   Vice  President,   Tok  Chamber   of  Commerce,                                                              
informed  the committee  green,  renewable energy  is heating  and                                                              
lighting the Tok  School; in fact, in the first  year of operation                                                              
the biomass-fired  boiler has saved  the school over  $80,000, and                                                              
after the  addition of a steam-powered  turbine, the  savings will                                                              
be  over  $200,000.    He advised  the  state  investment  in  the                                                              
project will  be repaid in less  than 10 years.  Because  the life                                                              
of the  project  is 25 years,  and with  the rising  cost of  fuel                                                              
oil,  the conversion  to woody  biomass in  Tok is  a wise use  of                                                              
public funds and  forest resources.  The project  is also boosting                                                              
the  private sector  of  the local  economy  by  creating a  fuel-                                                              
procurement industry,  and reduces hazardous fuel,  thereby saving                                                              
the state $20,000  per acre in firefighting expenses.    Also, the                                                              
residents of the  community are safer.  Tok's local  utility is in                                                              
the  process of  determining  whether woody  biomass  is a  viable                                                              
option  for generating  power on  its  local grid.   Further,  the                                                              
utility  and  the  Division of  Forestry,  Department  of  Natural                                                              
Resources,  are  now looking  at  developing a  long-term  harvest                                                              
plan  to augment  the community  action fire  plan.   Furthermore,                                                              
wood  vendors  and  the  utility's  representative  from  Tok  are                                                              
investigating best  practices and  the latest technology  for fuel                                                              
harvest and  optimal combined heat  and power plant  operations in                                                              
Europe.  Mr. Stancliff  related other examples of the  use of wood                                                              
for heat  and power  in the U.S.  and Europe.   He concluded  that                                                              
woody biomass "has  opened the door for better  forest management,                                                              
with  more trees  being planted  and growing  on otherwise  fallow                                                              
land."   Willow and  aspen can be  used as  a rotational  crop for                                                              
harvest by  modified agricultural  equipment.   The Tok  School is                                                              
an  example  of utilizing  this  system  and  leading the  way  in                                                              
forest  research   and  management  strategies  to   ensure  woody                                                              
biomass  improves   the  forest  and  wildlife   habitat,  reduces                                                              
pollution  and   carbon  emissions,  and  reverses   the  economic                                                              
decline.                                                                                                                        
                                                                                                                                
11:14:58 AM                                                                                                                   
                                                                                                                                
^PRESENTATION:   International  Trade Update,  World Trade  Center                                                              
Alaska                                                                                                                          
 PRESENTATION:  International Trade Update, World Trade Center                                                              
                             Alaska                                                                                         
                                                                                                                              
11:14:26 AM                                                                                                                   
                                                                                                                                
CHAIR HERRON announced  that the final order of  business would be                                                              
a presentation  by the  executive director  of World Trade  Center                                                              
Alaska.                                                                                                                         
                                                                                                                                
11:15:56 AM                                                                                                                   
                                                                                                                                
GREG  WOLF,   Executive  Director,   World  Trade  Center   Alaska                                                              
(WTCAK), provided  a PowerPoint  presentation entitled,  "Alaska's                                                              
Place  in the World:   An  Update on  International Trade,"  dated                                                              
2/21/12.    He stated  that  international  trade  is a  very  big                                                              
business  for  Alaska.    For  the  period  from  January  through                                                              
October, 2011, annual  worldwide exports from Alaska  totaled $4.7                                                              
billion,  which is an  all-time record  for the  second year  in a                                                              
row;  in  fact,  by  the end  of  the  year  exports  exceeded  $5                                                              
billion.    Alaska's  biggest  export   market  is  now  China,  a                                                              
position  previously held  by  Japan.   Exports  now represent  10                                                              
percent  of Alaska's  Gross State  Product (GSP)  of $50  billion,                                                              
which  is the  sum  of  all goods  and  services produced  in  the                                                              
state.   In  addition,  the  income  from exports  represents  new                                                              
money into the  economy and thousands of direct  and indirect jobs                                                              
throughout the  state, resulting  in a stronger,  more diversified                                                              
economy insulated from  "peaks and valleys."  Even  with its small                                                              
population,  and  without  large   manufacturing  or  agricultural                                                              
industries, Alaska ranks 37th among all states in exports.                                                                      
                                                                                                                                
11:19:01 AM                                                                                                                   
                                                                                                                                
CHAIR HERRON handed the gavel to Representative Keller.                                                                         
                                                                                                                                
11:19:14 AM                                                                                                                   
                                                                                                                                
MR. WOLF  continued to explain why  trade matters:   Trade usually                                                              
includes  the  export  of  all   commodities;  however,  the  U.S.                                                              
Department  of  Commerce  (DOC)  does not  report  the  export  of                                                              
services   such  as   engineering,   construction,   environmental                                                              
services,   and  architecture,   which   may   account  for   over                                                              
$750,000,000.   For example,  there was one  oil and  gas services                                                              
company  that   reported  $500   million  in  exported   services.                                                              
Furthermore,  in  addition  to  contributing  $5  billion  to  the                                                              
economy, exports  account for  another $2  billion in  induced and                                                              
indirect  economic  benefits.   Exports  also allow  companies  in                                                              
Alaska  to become  larger through  expanded  markets and  customer                                                              
bases; in  fact, for  some Alaska companies,  their best  bets for                                                              
growth are  markets overseas or in  the Lower 48.  In  response to                                                              
Representative  Tuck,  he  confirmed   that  the  above  mentioned                                                              
company was incorporated in Alaska at the time of its report.                                                                   
                                                                                                                                
11:22:41 AM                                                                                                                   
                                                                                                                                
MR.  WOLF  said  a  recent  study   by  Northern  Economics  -  an                                                              
Anchorage  firm  - reported  that  exports support  nearly  15,000                                                              
direct, and  9,800 indirect and  induced, jobs in Alaska.   Export                                                              
jobs are  higher paying jobs  and typically  pay 13 to  16 percent                                                              
more than  jobs tied  solely to the  domestic economy.   According                                                              
to  DOC  there are  approximately  340  companies  exporting  from                                                              
locations  in Alaska.   Mr.  Wolf displayed  slide 4  which was  a                                                              
graph indicating  Alaska's top export commodities  are as follows:                                                              
seafood - 47  percent, which is the state's largest  single export                                                              
item;  minerals  -  35  percent,   the  second  largest  commodity                                                              
comprised  primarily  of  zinc  and  lead;  energy  -  6  percent,                                                              
consisting  of liquefied  natural  gas  (LNG), coal,  and  refined                                                              
fuel; precious  metals - 5 percent;  forest products -  2 percent;                                                              
and fish meal - 1 percent.                                                                                                      
                                                                                                                                
11:26:11 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  TUCK   recalled  in  the  '80s,   the  legislature                                                              
attempted  to   ensure  the  value-added  manufacture   of  forest                                                              
products  before their export.   He  said it  would be  helpful to                                                              
compare  imports  and exports  with  the  intent to  decrease  the                                                              
amount of raw materials exported, except for seafood.                                                                           
                                                                                                                                
MR. WOLF  explained that  it is difficult  to get accurate  import                                                              
information  because many  goods destined  for Alaska first  enter                                                              
the country  in California  or Washington.    He opined the  state                                                              
has a trade surplus  with some countries, but it  is not reported.                                                              
Slide 5  displayed Alaska's export  markets:  China -  28 percent,                                                              
which is the  first time since statehood that  the greatest export                                                              
market  has  not been  Japan;  Japan  -  20  percent; Korea  -  12                                                              
percent;   Canada  -  12   percent.     Other  markets,   although                                                              
important,  are  smaller and  specific  to  a  type of  item,  for                                                              
example,  exports  to  Switzerland  are  precious  metals.    Asia                                                              
accounts for almost  70 percent of Alaska's total  exports because                                                              
Alaska has  the resources  Asia needs,  is relatively  nearby, and                                                              
is stable politically.                                                                                                          
                                                                                                                                
11:31:11 AM                                                                                                                   
                                                                                                                                
MR.  WOLF  displayed  slide  6,  which was  a  graph  of  Alaska's                                                              
worldwide exports from  1994 to 2011.  Beginning  in 1994, exports                                                              
were  at  $2.5  billion,  and  values   have  increased  with  the                                                              
exception  of  times  of  recession   in  1998,  2008,  and  2009.                                                              
However, exports  have recovered  sharply and  have risen  to $5.2                                                              
billion in  2011.  He  pointed out that  Alaska has  the essential                                                              
commodities  needed  for  economic  development  such  as  energy,                                                              
minerals, metals,  and seafood.   Also, emerging markets  in China                                                              
and  India are  growing at  a rate  of 8  to 9  percent, and  both                                                              
countries   have  enormous   needs  for   natural  resources   and                                                              
infrastructure.   He  advised that  if  it were  not for  overseas                                                              
exports of  seafood, coal,  and metals,  Alaska could  not support                                                              
the industry it  has.  Slide 7 indicated the growth  of exports to                                                              
China from $103  million in 2000, to an estimated  $1.5 billion in                                                              
2011.  This is a rate of unprecedented growth.                                                                                  
                                                                                                                                
11:35:50 AM                                                                                                                   
                                                                                                                                
MR.  WOLF advised  that there  are three  overarching trends  that                                                              
are benefitting  Alaska exports,  noting that  there is  growth in                                                              
the consumer  global "middle class"  of people with more  money to                                                              
spend.   Also,  a  scarcity in  resources  is  tied to  population                                                              
growth and  the rising  expectations of  people around  the world.                                                              
Finally, the  continuing decline  of the  U.S. dollar  means goods                                                              
are more affordable  to "non-dollar" buyers.  Slide  9 was a graph                                                              
combining  the demand  for natural  gas  in China  and India  from                                                              
about 2  billion cubic feet  per day in  1987 to 12  billion cubic                                                              
feet per  day in 2009.   Slide 10 was  a diagram of  landed prices                                                              
for  LNG markets  around the  world showing  that markets  nearest                                                              
Alaska,  such as  Japan  and Korea,  have  LNG  prices in  double-                                                              
digits.  Turning  to the subject of shale gas, Mr.  Wolf said that                                                              
China National  Offshore Oil Corporation  (CNOOC) has  made multi-                                                              
billion dollar  investments in shale  gas leases in the  Lower 48.                                                              
Another state-owned  corporation, China Petrochemical  Corporation                                                              
(SINOPEC),  invested significantly  in  a partnership  with  Devon                                                              
Energy.  He opined  these investments are driven by  the desire to                                                              
learn natural gas technology for future opportunities in China.                                                                 
                                                                                                                                
11:40:02 AM                                                                                                                   
                                                                                                                                
MR. WOLF  said WTCAK works with  the private sector  and community                                                              
partners utilizing  its "Boots  on the  Ground" strategy,  and has                                                              
led trade  missions  to a variety  of countries  so that  Alaskans                                                              
can  see and  experience first-hand  overseas  markets for  better                                                              
understanding,  and to  make  business contacts.    There is  also                                                              
great  value in  including  government  and elected  officials  on                                                              
these missions,  as some companies and corporations  are partially                                                              
or totally  state-owned.   Mr. Wolf  then described four  country-                                                              
focused trade development  programs:  Japan Focus;  China Calling;                                                              
Canada  Opportunities Next  Door;  and Korea  Connection. A  fifth                                                              
focus is  New Markets,  New Customers,  which applies  to emerging                                                              
markets  in India,  Singapore,  and others.    Finally, he  listed                                                              
WTCAK's  three long-term  strategic  partners:       the State  of                                                              
Alaska;  the  University  of  Alaska;   and  the  U.S.  Commercial                                                              
Service, U.S. Department of Commerce.                                                                                           
                                                                                                                                
11:44:15 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE THOMPSON  asked whether WTCAK has  identified areas                                                              
and  industries  through  which Alaska  could  market  value-added                                                              
products.                                                                                                                       
                                                                                                                                
MR. WOLF  said yes, generally in  response to companies  that seek                                                              
help; for example, bottling freshwater to ship overseas.                                                                        
                                                                                                                                
11:46:16 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE TUCK  expressed his  interest in knowing  what part                                                              
of final  manufactured goods Alaska  exports.  Also,  he suggested                                                              
that the state  has the raw materials to  manufacture desalination                                                              
plants  for  export.   This  would  result  in  Alaska  extracting                                                              
resources  for its  own  benefit  and manufacturing  products  for                                                              
export,  rather  than  exporting  resources  to the  rest  of  the                                                              
world.                                                                                                                          
                                                                                                                                
MR. WOLF  agreed that  more value added  to resources  before they                                                              
are exported will capture a higher ultimate value.                                                                              
                                                                                                                                
REPRESENTATIVE  TUCK  suggested a  look  at how  Japan  - with  no                                                              
resources of its own - became a manufacturing giant.                                                                            
                                                                                                                                
11:49:15 AM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being  no further business  before the committee,  the House                                                              
Special  Committee on  Economic  Development, International  Trade                                                              
and Tourism meeting was adjourned at 11:49 a.m.                                                                                 

Document Name Date/Time Subjects
EDT - 2.21.12 Deerfield.pdf HEDT 2/21/2012 10:15:00 AM
EDT 2.21.12 - SEIRP- Biomass - AEA Plentovich & Strandberg.pdf HEDT 2/21/2012 10:15:00 AM
EDT 2-16-12 Biomass Presentation - Saltonbasker.pdf HEDT 2/21/2012 10:15:00 AM
WTCAK EDT - 2.21.12.pdf HEDT 2/21/2012 10:15:00 AM