Legislature(2009 - 2010)BARNES 124

02/04/2010 03:00 PM House ENERGY


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03:07:00 PM Start
03:07:21 PM Overview(s) by Admiral Tom Barrett, Office of the Federal Coordinator, Alaska Natural Gas Transportation Projects: Alaska Natural Gas Pipeline Projects
03:57:33 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview by Admiral Tom Barrett, Office TELECONFERENCED
of the Federal Coordinator, Alaska
Natural Gas Transportation Projects:
Alaska Natural Gas Pipeline Projects
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE SPECIAL COMMITTEE ON ENERGY                                                                              
                        February 4, 2010                                                                                        
                           3:07 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Nancy Dahlstrom                                                                                                  
Representative Kyle Johansen                                                                                                    
Representative Jay Ramras                                                                                                       
Representative Pete Petersen                                                                                                    
Representative Chris Tuck                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Bryce Edgmon, Co-Chair                                                                                           
Representative Charisse Millett, Co-Chair                                                                                       
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW(S): BY ADMIRAL TOM BARRETT, OFFICE OF THE FEDERAL                                                                      
COORDINATOR, ALASKA NATURAL GAS TRANSPORTATION PROJECTS:  ALASKA                                                                
NATURAL GAS PIPELINE PROJECTS                                                                                                   
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                              
ADMIRAL TOM BARRETT, U.S. Coast Guard Retired; Deputy Federal                                                                   
Coordinator                                                                                                                     
Office of the Federal Coordinator                                                                                               
Alaska Natural Gas Transportation Projects                                                                                      
Anchorage, Alaska                                                                                                               
                                                                                                                                
POSITION STATEMENT:  Presented an update on the Alaska natural                                                                
gas pipeline projects.                                                                                                          
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:07:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHANSEN called the House Special Committee on                                                                   
Energy meeting to order at 3:07 p.m.  Present at the call to                                                                    
order   were  Representatives   Petersen,  Tuck,   and  Johansen.                                                               
Representatives Ramras  and Dahlstrom arrived as  the meeting was                                                               
in progress.                                                                                                                    
                                                                                                                                
3:07:21 PM                                                                                                                    
                                                                                                                                
^Overview(S)  By  Admiral  Tom  Barrett, Office  Of  The  Federal                                                             
Coordinator, Alaska Natural Gas  Transportation Projects:  Alaska                                                             
Natural Gas Pipeline Projects                                                                                                 
   Overview(S): By Admiral Tom Barrett, Office Of The Federal                                                               
 Coordinator, Alaska Natural Gas Transportation Projects:  Alaska                                                           
                 Natural Gas Pipeline Projects                                                                              
                                                                                                                              
REPRESENTATIVE  JOHANSEN   announced  that  the  only   order  of                                                               
business  would be  an overview  by Admiral  Tom Barrett,  Deputy                                                               
Coordinator  of the  Office of  the  Federal Coordinator,  Alaska                                                               
Natural Gas Transportation Projects.                                                                                            
                                                                                                                                
3:07:59 PM                                                                                                                    
                                                                                                                                
ADMIRAL TOM  BARRETT, U. S.  Coast Guard Retired,  Deputy Federal                                                               
Coordinator,  Office  of  the   Federal  Coordinator  for  Alaska                                                               
Natural Gas  Transportation Projects, said that  his presentation                                                               
would  update the  committee on  the  status of  the natural  gas                                                               
pipeline projects  and provide new  information on  energy issues                                                               
relative to  the state.  As  a federal official, he  said he does                                                               
not  want to  intrude on  state  business; actually,  one of  the                                                               
roles  of the  Office  of  the Federal  Coordinator  (OFC) is  to                                                               
provide timely,  accurate, and  comprehensive information  on the                                                               
projects  to assist  the committee  as  it makes  decisions.   In                                                               
2004, the OFC was tasked by  Congress to expedite the movement of                                                               
Arctic gas  to North  American markets.   This goal  includes the                                                               
elimination of "red  tape" by reducing the  bureaucracy, at least                                                               
on  the  federal  side,  and  coordinating  with  other  relevant                                                               
organizations  such  as  the  state,  tribes,  and  the  Canadian                                                               
authorities, to  reduce the  cost of  the project.   Some  of the                                                               
areas of  responsibility of  the OFC  are:   upfront coordination                                                               
with other federal  agencies and other parties;  the authority to                                                               
enforce  compliance with  certain conditions  of law  such as  to                                                               
prevent  unnecessary delay  by federal  agencies; and  to oversee                                                               
construction and operation of the facility in its "start-up."                                                                   
                                                                                                                                
3:10:39 PM                                                                                                                    
                                                                                                                                
ADMIRAL BARRETT  continued to explain  that the OFC also  holds a                                                               
charter   to   provide   information   about   the   project   to                                                               
stakeholders,   Congress,    the   administration,    the   state                                                               
legislature,  and  the  public.    In  order  to  facilitate  the                                                               
coordination of interests, he noted  that the OFC meets regularly                                                               
with the federal agencies involved  with the project at the site,                                                               
and it also meets regularly with  the state and with Denali - The                                                               
Alaska Gas  Pipeline (Denali) and  the Alaska  Gasline Inducement                                                               
Act  (AGIA)  permitting  staff,  to  understand  the  issues  and                                                               
prevent "friction from  developing."  In addition,  the OFC meets                                                               
regularly  with  Canadian  authorities  on  the  issues  of  dual                                                               
permitting.  Addressing the fact  of two applicants moving toward                                                               
the same  project, he said  the goal of the  OFC is to  provide a                                                               
level playing  field on the  federal permitting side so  that any                                                               
applicant  is  treated fairly  and  equitably.   Admiral  Barrett                                                               
pointed out that  there are at least 22 agencies  and a number of                                                               
departments that all  would have a part in the  construction of a                                                               
gas  pipeline.    Further responsibilities  of  the  OFC  include                                                               
compliance  and  information.   For  example,  after the  Federal                                                               
Energy  Regulatory  Commission  (FERC) issues  a  Certificate  of                                                               
Public Convenience  and Necessity (CPCN)  there is a  deadline of                                                               
18 months and  the OFC would investigate  any unnecessary delays.                                                               
He  relayed  that the  OFC  began  a  gap analysis  mainly  using                                                               
information  from  the  Trans-Alaska Pipeline  System  (TAPS)  to                                                               
identify issues  that may arise  from permitting in  the existing                                                               
right-of-way  (ROW), and  the construction  of  a large  pipeline                                                               
energy project.   In addition,  the OFC prepared the  first phase                                                               
of an  implementation plan for  Denali and  a similar plan  is in                                                               
progress  for   TransCanada's  Alaska  Pipeline   Project  (APP).                                                               
Basically, an  implementation plan is  a schedule to  ensure that                                                               
the agencies  are "in sync"  and none fall behind.   Furthermore,                                                               
the OFC  has prepared a  prototype geographic  information system                                                               
(GIS) for  the project  by organizing  information from  TAPS and                                                               
integrating new technology such  as the global positioning system                                                               
(GPS)  for  mapping.    Admiral  Barrett  advised  that  Alaska's                                                               
baseline mapping is inaccurate and  out-of-date, and he described                                                               
the process  for the improved  mapping of Atigun Pass  that could                                                               
also  be  used  for  the benefit  of  aviation  and  subsistence,                                                               
geographic, and wildlife studies.                                                                                               
                                                                                                                                
3:16:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS asked  the  Admiral to  relate his  career                                                               
background information.                                                                                                         
                                                                                                                                
3:17:39 PM                                                                                                                    
                                                                                                                                
ADMIRAL BARRETT described his career  that began with 35 years in                                                               
the U.S.  Coast Guard.   He then  returned to the  mapping effort                                                               
and  pointed out  a significant  inaccuracy in  existing mapping.                                                               
Admiral Barrett  opined that integrated information  will provide                                                               
greater   public  transparency   for   web   access  and   better                                                               
understanding.   The prototype is currently  available for review                                                               
by  federal and  state agencies  and an  assessment of  its merit                                                               
will be  completed prior to further  funding of the project.   He                                                               
turned to  the subject  of a permit  matrix and  observed because                                                               
any  large  pipeline project  requires  hundreds  of permits  and                                                               
approvals, the OFC  seeks to understand the  approval process and                                                               
also to understand the data  requirements for making decisions on                                                               
the  permits.   For  example,  if  an  agency  will be  making  a                                                               
decision on  permitting, the OFC  needs to know  what information                                                               
the agency needs,  and to watch for overlaps so  the same data is                                                               
not  requested by  separate agencies.    Admiral Barrett  relayed                                                               
that OFC  chaired a technical  work team in Anchorage  to discuss                                                               
the technical  issues of  the pipeline  project such  as seismic,                                                               
regular   permafrost,  discontinuous   permafrost,  environmental                                                               
changes over 30 years, wetlands,  and the construction of a large                                                               
gas treatment plant.                                                                                                            
                                                                                                                                
3:26:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DAHLSTROM asked for more information on the maps.                                                                
                                                                                                                                
3:27:01 PM                                                                                                                    
                                                                                                                                
ADMIRAL  BARRETT  further  explained  that  light  detection  and                                                               
ranging (LIDAR)  was used for a  base map.  However,  for a study                                                               
such as  a wetlands  study by  the U.S.  Army Corps  of Engineers                                                               
(USACE), overlays  are added to  display the  wetlands, wildlife,                                                               
or land  ownership.  He  described the difficulties in  using the                                                               
present mapping system and the  importance of accurate mapping to                                                               
the residents of Alaska.                                                                                                        
                                                                                                                                
3:28:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DAHLSTROM requested a  future demonstration of the                                                               
new mapping system.                                                                                                             
                                                                                                                                
3:29:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   JOHANSEN   offered   to   relay   Representative                                                               
Dahlstrom's request to the committee co-chairs.                                                                                 
                                                                                                                                
3:29:49 PM                                                                                                                    
                                                                                                                                
ADMIRAL BARRETT continued to the  subject of current developments                                                               
of the  pipeline projects.   He indicated  that the  in-state gas                                                               
study is  part of  the initial  FERC filing by  APP.   After FERC                                                               
approval, there  will be  an opportunity  for public  comment and                                                               
FERC  will require  the applicant  to resolve  any issues  to its                                                               
satisfaction.  At  this time, open season is  scheduled to finish                                                               
by  the end  of  July.   He  noted that  FERC  held briefings  to                                                               
clarify the process.   Denali has indicated that  its filing will                                                               
be in  April; he opined both  projects have invested much  to lay                                                               
out the actual project descriptions and initial cost estimates.                                                                 
                                                                                                                                
3:31:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS  recalled a meeting  last year at  the U.S.                                                               
Department of Energy (DOE) where  there was interest by the Obama                                                               
Administration in the  Alaska natural gas pipeline;  in fact, the                                                               
national security value  of the pipeline was clear.   However, he                                                               
wondered why  the administration was neutral  about the economics                                                               
of  the   project.    Representative  Ramas   asked  for  Admiral                                                               
Barrett's perspective  on how the  committee reconciles  its duty                                                               
to develop  a profitable  gas pipeline with  the position  of the                                                               
administration.                                                                                                                 
                                                                                                                                
3:34:56 PM                                                                                                                    
                                                                                                                                
ADMIRAL BARRETT  agreed that the  markets will be the  driver for                                                               
the pipeline.  Fundamentally, the  OFC believes that in the long-                                                               
term there will  be room in the market for  Alaska's natural gas.                                                               
He  shared  that  Larry  Persily, nominee  for  the  position  of                                                               
Federal  Coordinator, OFC,  testified  that transportation  costs                                                               
will be  lower for shale  gas, but  the production costs  will be                                                               
more.   Admiral Barrett opined  "the sense" in  Washington [D.C.]                                                               
is that  the Alaska gas  pipeline is  a good project  because the                                                               
loan guarantees  are available and  there is  legislative support                                                               
on the  national level.   In fact, although  DOE has put  a great                                                               
deal of  emphasis on renewable  sources of energy,  it recognizes                                                               
that a  huge piece of the  U.S. energy supply cannot  be replaced                                                               
quickly,  and natural  gas  is needed  during  the transition  to                                                               
renewables.   He  stressed that  there  is good  support for  the                                                               
project and  he has heard  it said, "Tell  us what else  we might                                                               
consider doing that would be helpful."                                                                                          
                                                                                                                                
3:38:53 PM                                                                                                                    
                                                                                                                                
ADMIRAL  BARRETT  observed   that  the  California  Environmental                                                               
Protection Air  Resources Board has approved  the construction of                                                               
a natural gas  facility in the San Francisco Bay  area because it                                                               
has a 50  percent cleaner footprint than some other  options.  He                                                               
has also heard  that Alaska gas would provide about  8 percent of                                                               
the U.  S. market for  natural gas,  thus a long-term  and stable                                                               
source  of  gas  from  Alaska  will  stabilize  prices  and  will                                                               
encourage users  to convert  to natural gas.   He  concluded that                                                               
there is no  opposition to the project, and  his personal opinion                                                               
is that  Alaska must do everything:  get more oil out  of Prudhoe                                                               
Bay, go offshore,  and leverage the state's assets.   All in all,                                                               
the natural gas  pipeline project is less  controversial and more                                                               
benign environmentally than other  options.  Admiral Barrett then                                                               
encouraged the committee to  watch cap-and-trade legislation, the                                                               
national  energy bill,  and other  policy  initiatives moving  in                                                               
Washington D.C. that have potential  impacts on the project.  The                                                               
project  has strong  support  from the  Department  of Labor;  in                                                               
fact,  the project  is  a  $30 to  $40  million privately  funded                                                               
"stimulus bill,"  unlike the  California high-speed  rail project                                                               
that would be totally funded by  government.  Turning to the jobs                                                               
issue,  he praised  the training  programs that  are underway  in                                                               
Fairbanks, and said, "Labor is  very strong behind [the project],                                                               
your  NGO's are  not fighting  it ...  the economic  benefits are                                                               
huge."  In case the committee  was not aware, he pointed out that                                                               
the  FERC   open  season  regulations  are   designed  to  permit                                                               
competition,  so  the  fact  that there  are  two  applicants  is                                                               
accommodated  by  its  regulatory  design.   On  the  subject  of                                                               
infrastructure analysis, he encouraged  the committee to consider                                                               
that the  state infrastructure  such as  the haul  road, aviation                                                               
facilities,  port facilities,  and transportation  facilities, is                                                               
"thin."                                                                                                                         
                                                                                                                                
3:45:48 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
ADMIRAL  BARRETT relayed  that the  OFC filed  comments that  the                                                               
critical  habitat area  designations for  polar bears  are overly                                                               
broad,   based   on   the   scientific   information   presented.                                                               
Similarly,  the OFC  plans to  "file on  belugas."   He cautioned                                                               
that if the  movement of a significant amount of  pipe is tied up                                                               
at the  ports in Cook Inlet,  additional costs due to  delay will                                                               
be added to a project of any  size.  In truth, looking at broader                                                               
national  level  agency  actions  that  are  linked  to  Alaska's                                                               
general    transportation   infrastructure    would   have    big                                                               
implications  for the  project.   Admiral  Barrett then  stressed                                                               
that  even in-state  projects need  federal permits  of different                                                               
types;  actually,  a conflict  to  avoid  is that  of  precedents                                                               
attached to an in-state line  that have negative implications for                                                               
permits for the main line.                                                                                                      
                                                                                                                                
3:47:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS  asked for comments on  the suggestion that                                                               
the state should  not build a pipeline, but wait  for the [polar]                                                               
ice to melt and ship the gas out as LNG.                                                                                        
                                                                                                                                
3:48:51 PM                                                                                                                    
                                                                                                                                
ADMIRAL BARRETT advised  that issues of a deep water  port in the                                                               
Arctic are different than those of  a deep water port in the Gulf                                                               
of Mexico because,  even with melting, there is a  lot of ice and                                                               
it is  moving with incredible force  behind it.  An  advantage of                                                               
the on-shore  infrastructure is "you've got  Prudhoe Bay;a you've                                                               
got TAPS  coming out of  there."  He  opined the Arctic  Ocean is                                                               
"not going  to go from ice  to no ice,  it's going to go  to less                                                               
ice for a long time," and with the implications thereof.                                                                        
                                                                                                                                
3:51:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS asked  what the  role of  the Coast  Guard                                                               
will be in the Arctic for the next quarter of a century.                                                                        
                                                                                                                                
3:51:58 PM                                                                                                                    
                                                                                                                                
ADMIRAL  BARRETT  responded  that   the  Coast  Guard  will  have                                                               
multiple  roles,  including  the   following  missions:    assert                                                               
national sovereignty; manage and  protect U.S. interests; provide                                                               
search  and  rescue;  address environmental  and  fish  concerns;                                                               
energy development; and law enforcement.                                                                                        
                                                                                                                                
3:54:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PETERSEN  asked  Admiral Barrett  to  talk  about                                                               
issues regarding oil and gas projects in Canada.                                                                                
                                                                                                                                
3:54:43 PM                                                                                                                    
                                                                                                                                
ADMIRAL  BARRETT advised  that the  Mackenzie Valley  Natural Gas                                                               
Project  recently  submitted a  study  to  the (Canada)  National                                                               
Energy Board.  He expressed his  point of view that there is room                                                               
in the market  for both pipelines, due to the  fact that Canadian                                                               
natural  gas supplies  are on  a  downturn.   However, the  study                                                               
indicated that the  project is subject to 150  conditions and the                                                               
OFC is  in the process of  reviewing those conditions.   Also, in                                                               
regard to the  development of oil sands  in Canada, environmental                                                               
communities  "like the  gas line  project,  as long  as it's  not                                                               
used,  in their  terms, 'to  get more  dirty oil  out of  the oil                                                               
sands'."   The answer to this  concern is that U.S.  law requires                                                               
that an  equal volume of  gas must enter,  and exit, Canada.   In                                                               
addition, First Nations have concerns  similar to those of Alaska                                                               
Natives  regarding  land use  and  subsistence  issues.   Admiral                                                               
Barrett said  the OFC will  work closely with agencies  to manage                                                               
issues brought up by tribal interests.                                                                                          
                                                                                                                                
3:57:33 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Special Committee on Energy meeting was adjourned at 3:5[7] p.m.                                                                

Document Name Date/Time Subjects
Alaska Legislative Presentation 2010.ppt HENE 2/4/2010 3:00:00 PM
Energy Committee Agenda 02042010.doc HENE 2/4/2010 3:00:00 PM