Legislature(2013 - 2014)BARNES 124

03/03/2014 08:00 AM House ENERGY


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08:04:12 AM Start
08:05:48 AM Presentation: Merged Energy Solutions
10:02:07 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Joint with House EDT
+ Presentations: "Multi-Industrial Greenhouse TELECONFERENCED
Facility" & "Transforming Alaska - Airships" by
Michael Smith, CEO & Kurtis Zell, Development
Coordinator, Merged Energy Solutions
                    ALASKA STATE LEGISLATURE                                                                                  
                         JOINT MEETING                                                                                        
               HOUSE SPECIAL COMMITTEE ON ENERGY                                                                              
  HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, TRADE, AND                                                                 
                            TOURISM                                                                                           
                         March 3, 2014                                                                                          
                           8:04 a.m.                                                                                            
MEMBERS PRESENT                                                                                                               
                                                                                                                                
HOUSE SPECIAL COMMITTEE ON ENERGY                                                                                               
                                                                                                                                
 Representative Doug Isaacson, Co-Chair                                                                                         
 Representative Pete Higgins                                                                                                    
 Representative Shelley Hughes                                                                                                  
 Representative Benjamin Nageak                                                                                                 
 Representative Andy Josephson                                                                                                  
                                                                                                                                
HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, TRADE, AND                                                                     
TOURISM                                                                                                                         
                                                                                                                                
 Representative Shelley Hughes, Chair                                                                                           
 Representative Pete Higgins                                                                                                    
 Representative Lance Pruitt                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
HOUSE SPECIAL COMMITTEE ON ENERGY                                                                                               
                                                                                                                                
 Representative Charisse Millett, Co-Chair                                                                                      
 Representative Neal Foster                                                                                                     
                                                                                                                                
HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, TRADE, AND                                                                     
TOURISM                                                                                                                         
                                                                                                                                
 Representative Lynn Gattis                                                                                                     
 Representative Bob Herron                                                                                                      
 Representative Craig Johnson                                                                                                   
 Representative Kurt Olson                                                                                                      
 Representative Harriet Drummond                                                                                                
 Representative Geran Tarr                                                                                                      
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION:  MERGED ENERGY SOLUTIONS                                                                                          
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
R. MICHAEL SMITH, CEO                                                                                                           
Merged Energy Solutions                                                                                                         
Los Angeles, California                                                                                                         
POSITION  STATEMENT:   Provided a  presentation by  Merged Energy                                                             
Solutions.                                                                                                                      
                                                                                                                                
KURTIS ZELL, Development Coordinator                                                                                            
Merged Energy Solutions                                                                                                         
Los Angeles, California                                                                                                         
POSITION  STATEMENT:   Provided a  presentation by  Merged Energy                                                             
Solutions.                                                                                                                      
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
8:04:12 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  DOUG ISAACSON  called the  joint meeting  of the  House                                                             
Special Committee  on Energy and  the House Special  Committee on                                                               
Economic Development,  Trade, and Tourism  to order at  8:04 a.m.                                                               
Representatives  Higgins, Nageak,  Hughes,  and  Isaacson of  the                                                               
House Special  Committee on  Energy were present  at the  call to                                                               
order and Representative Josephson arrived  as the meeting was in                                                               
progress.    Representatives  Higgins  and Hughes  of  the  House                                                               
Special  Committee on  Economic Development,  Trade, and  Tourism                                                               
were  present at  the  call to  order  and Representative  Pruitt                                                               
arrived as the meeting was in progress.                                                                                         
                                                                                                                                
^PRESENTATION:  MERGED ENERGY SOLUTIONS                                                                                         
             PRESENTATION:  MERGED ENERGY SOLUTIONS                                                                         
                                                                                                                              
8:05:48 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  ISAACSON  announced that  the  only  order of  business                                                               
would be presentations  by Merged Energy Solutions  on the Multi-                                                               
Industrial Greenhouse Facility and Transforming Alaska.                                                                         
                                                                                                                                
8:07:05 AM                                                                                                                    
                                                                                                                                
R.  MICHAEL SMITH,  CEO, Merged  Energy  Solutions, informed  the                                                               
committee Merged Energy  Solutions (MES) was founded  in 2007 and                                                               
has  evolved from  a revenue-based  company into  a company  that                                                               
creates new  technologies to  bring new  energy into  the [power]                                                               
system.   Further, in response  to restrictive federal  and state                                                               
laws  limiting  some endeavors,  the  company  has developed  the                                                               
multi-industrial  greenhouse   (MIG).    In  2007,   the  company                                                               
intended to develop solar energy  and biomass gasification energy                                                               
systems.    In Southern  California  the  air quality  management                                                               
division (AQMD)  laws were very restrictive  on gasification, and                                                               
as a  revenue-driven company, MES  discovered the  performance of                                                               
solar energy  was unsatisfactory on its  own.  Thus, in  order to                                                               
comply  with  AQMD  laws,  the  company  began  work  to  improve                                                               
gasification technology  to mitigate  emissions.   After research                                                               
and  testing MES  found the  carbon dioxide  (CO2) and  polluting                                                               
carbon  (NOx)  emissions  produced by  the  gasification  process                                                               
could  be utilized  by building  an atypical  greenhouse that  is                                                               
hermetically  sealed.    Mr.  Smith  directed  attention  to  the                                                               
PowerPoint  presentation  entitled, "Multi-Industrial  Greenhouse                                                               
Facility," and  said the mission of  MES is to renew  and build a                                                               
sustainable Earth  by empowering and educating  people throughout                                                               
the world.  The company  collaborates with nature and technology,                                                               
and realizes there are food  security issues, and so incorporates                                                               
food, clean  water, and more  by building  state-of-the-art clean                                                               
energy  and agricultural  projects such  as the  multi-industrial                                                               
greenhouse  [slide 1].   An  MIG facility  is "going  through the                                                               
paperwork" for a site in  Riverside, California.  The facility is                                                               
comprised  of   the  following  components:   concentrated  solar                                                               
thermal, which  was chosen because of  its longevity, efficiency,                                                               
and disposal;  advanced biomass gasification; geo  thermal; high-                                                               
density  vertical farming;  aquaculture;  water desalination  and                                                               
purification;  and  an  academy  of  advanced  technical  science                                                               
[slide 3].   The concentrated solar panels are located  on top of                                                               
the MIG,  which is  built in  four quadrants,  each with  a glass                                                               
roof  [slide  4].   The  MIG  is  hermetically sealed,  and  each                                                               
environment  is  computer-controlled  so  as  to  grow  different                                                               
plants.                                                                                                                         
                                                                                                                                
CHAIR HUGHES asked when the facility will be built.                                                                             
                                                                                                                                
MR.  SMITH   said  the   facility  is   in  the   permitting  and                                                               
environmental  impact report  (EIR) process  at this  time.   The                                                               
facility will be operating in mid-2016.                                                                                         
                                                                                                                                
REPRESENTATIVE HIGGINS asked how the facility is financed.                                                                      
                                                                                                                                
MR.  SMITH  said private  money  is  financing the  $300  million                                                               
project because it was difficult to get government funding.                                                                     
                                                                                                                                
REPRESENTATIVE  HIGGINS  was  pleased  that  private  funds  were                                                               
obtained because that indicates the project is feasible.                                                                        
                                                                                                                                
MR.  SMITH  confirmed   that  the  design  does   not  use  solar                                                               
photovoltaic  (PV)   because  that   system  would  have   to  be                                                               
subsidized  to be  profitable.    The chosen  design  has a  very                                                               
attractive  return and  obtained private  money, using  a public-                                                               
private  financing  arrangement as  the  facility  is located  on                                                               
public  land  with  a  50-year   lease-purchase  agreement.    In                                                               
response to  Chair Hughes he  said the land  is from the  City of                                                               
Riverside,  which is  a municipality.   In  further response,  he                                                               
said the facility could operate in  the Antarctic if there were a                                                               
fuel source.                                                                                                                    
                                                                                                                                
8:22:06 AM                                                                                                                    
                                                                                                                                
CO-CHAIR ISAACSON inquired as to the type of fuel needed.                                                                       
                                                                                                                                
MR.  SMITH  said   MES  has  14  new  patents   on  power  source                                                               
technologies such as a water  gravity system that generates power                                                               
from running water.                                                                                                             
                                                                                                                                
REPRESENTATIVE  HUGHES  asked  whether   the  facility  would  be                                                               
economic in another climate.                                                                                                    
                                                                                                                                
MR. SMITH  said yes, depending on  the size of the  facility.  He                                                               
returned attention  to concentrated  solar thermal  and explained                                                               
that  the system  uses a  mirror and  focuses all  of its  direct                                                               
light to a heating element  filled with magnesium oil, which then                                                               
transfers its  heat to  a boiler,  then to steam,  then to  a co-                                                               
generator to produce  electricity [slide 5].  The  system is very                                                               
efficient,  but very  large in  size; however,  MES has  made the                                                               
technology smaller so as to function in the MIG facility.                                                                       
                                                                                                                                
CO-CHAIR  ISAACSON  asked  for  the  wattage  produced  from  the                                                               
smaller panels.                                                                                                                 
                                                                                                                                
8:26:46 AM                                                                                                                    
                                                                                                                                
MR.  SMITH  related the  smaller  panels  create 20-40  megawatts                                                               
maximum.   The facility site in  Riverside is 120 acres,  but the                                                               
systems   are   scalable   and   the   technologies   will   work                                                               
independently,  although multi-use  is  cost  effective and  more                                                               
efficient.    He  described the  principles of  how concentrating                                                               
solar thermal works  [slide 6].  Unlike solar PV,  this system is                                                               
not  feasible for  individual residential  installations at  this                                                               
point.   In  response to  Co-Chair Isaacson,  he said  the excess                                                               
heated water  can be diverted to  a storage tank instead  of to a                                                               
generator.                                                                                                                      
                                                                                                                                
REPRESENTATIVE HUGHES  inquired as  to whether the  reflection of                                                               
the sun off of snow helps a solar energy system.                                                                                
                                                                                                                                
MR. SMITH said  no, because solar panels need  direct sunlight in                                                               
order to absorb rays from the  sun.  The mirrors are installed on                                                               
a computerized tracking system to follow the sun all day.                                                                       
                                                                                                                                
REPRESENTATIVE HIGGINS asked where the  system has been tested in                                                               
cold  climates, and  observed that  regions of  Alaska have  very                                                               
short periods of light in the winter.                                                                                           
                                                                                                                                
8:34:03 AM                                                                                                                    
                                                                                                                                
MR. SMITH  clarified that  the facility does  not rely  solely on                                                               
solar  thermal, but  operates in  combination  with the  advanced                                                               
biomass gasification  (ABG) which  can use municipal  solid waste                                                               
(MSW)  or any  biofuel as  feedstock  to produce  energy day  and                                                               
night.    The ABG  system  solves  several problems  by  creating                                                               
energy and  diverting trash from landfills,  thereby saving water                                                               
contamination from methane.   The ABG system  first separates the                                                               
waste, and  then uses the  remainder for feedstock [slides  7 and                                                               
8].   Some systems are  incinerators, which put  carcinogens into                                                               
the air,  but ABG uses  heat, liquid,  and feedstock to  burn and                                                               
liquefy  most of  the waste  to produce  synthetic gas  (syngas),                                                               
ash,  and  purified water.    The  syngas  can  then be  used  to                                                               
generate electricity  or to  make synthetic  diesel fuel  - which                                                               
burns 98  percent clean -  and other byproducts  at a rate  of 55                                                               
gallons of  synthetic diesel  fuel for every  single ton  of MSW.                                                               
Another byproduct is  ash that can be used  in concrete, asphalt,                                                               
fertilizer,  or  as a  soil  conditioner.    Also, for  every  50                                                               
gallons of fuel, 100 gallons of  purified water is produced.  The                                                               
feedstock for the system can  be agricultural, such as dead trees                                                               
or wood chips, or MSW [slide  9]. In Southeast Asia, MES is using                                                               
water hyacinth for feedstock.                                                                                                   
                                                                                                                                
8:44:57 AM                                                                                                                    
                                                                                                                                
MR.   SMITH  summarized   other  MES   technologies:  geo-thermal                                                               
technology has been advanced with  new drilling techniques [slide                                                               
10]; using  three technologies, a  MES 150-acre MIG  facility can                                                               
generate 20-40 megawatts (MW) - while  consuming 3-4 MW - and can                                                               
power   2,400   homes;  the   facility   is   impervious  to   an                                                               
electromagnetic  pulse (EMP)  attack, earthquakes,  tsunamis, and                                                               
other  disasters [slide  11].    Regarding advanced  high-density                                                               
vertical farming  and aquaculture  systems, he  said MES  uses no                                                               
pesticides,   man-made  fertilizers,   or  genetically   modified                                                               
organisms (GMOs)  in its  advanced high-density  vertical farming                                                               
system, resulting  in healthier  products [slides  12-14].    The                                                               
high-density   vertical   farming   system   is   combined   with                                                               
aquaculture  and  uses water  infused  with  fish fertilizer  and                                                               
other nutrients.  No hormones  are used in the aquaculture system                                                               
and  the fish  swim against  a current  to stay  healthy.   Using                                                               
these  techniques, the  120-acre facility  can produce  an amount                                                               
equivalent  to  that of  3,000  ground  acres,  and of  a  higher                                                               
quality.                                                                                                                        
                                                                                                                                
8:51:36 AM                                                                                                                    
                                                                                                                                
MR.  SMITH   directed  attention  to  MES's   water  desalination                                                               
technology  [slide 15].    Typical  water desalination  processes                                                               
deposit  brine  back   into  the  ocean  that   can  kill  nearby                                                               
organisms.  The  MES system uses a plasma  reactor that separates                                                               
many of  the molecules attached to  water so that when  the water                                                               
passes through  the nano-filtration  system the water  is cleaner                                                               
and  better  tasting.    The  system does  not  use  chlorine  or                                                               
fluoride  in stored  water.    He stressed  that  this  is not  a                                                               
reverse  osmosis system;  in fact,  the  water is  run through  a                                                               
gasification system  that separates  the salts and  dissolves all                                                               
of the  brine [slide 16].   In response to Co-Chair  Isaacson, he                                                               
explained that  the "good" salts  are used to generate  a revenue                                                               
stream and the "bad" salts are  used in fuel.  Mr. Smith returned                                                               
to the MES  system of aquaculture, explaining  that opposing flow                                                               
technology  causes the  fish to  swim against  a current  thereby                                                               
producing a  healthy fish  [slide 17].   In response  to Co-Chair                                                               
Isaacson, he  said national  research labs  agree.   Typical fish                                                               
farms do not  have other systems working with them;  if using all                                                               
of the  components of  the MIG system,  pure water  is constantly                                                               
supplied and the fish excrement is extracted.                                                                                   
                                                                                                                                
8:57:58 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NAGEAK  asked whether the aquaculture  system only                                                               
uses freshwater.                                                                                                                
                                                                                                                                
MR. SMITH  acknowledged that MES  has not raised  saltwater fish,                                                               
but  would be  interested in  doing so.   He  concluded that  the                                                               
production of produce and fish  is a natural combination in order                                                               
to   grow  healthy   products,  save   land,  and   reduce  water                                                               
consumption [slides 18-20].    Mr. Smith  then directed attention                                                               
to  the  Academy  of  Advanced  Technical  Science  (TAATS),  and                                                               
expressed  his company's  belief that  what is  lacking today  in                                                               
education   is  the   knowledge  of   combining  technology   and                                                               
agriculture  [slides  21  and  22].    Most  students  today  are                                                               
inclined toward  technology and are unaware  of agriculture, thus                                                               
TAATS  allows  interested  students to  learn  new  technologies,                                                               
combine  agricultural techniques  with  advanced technology,  and                                                               
develop new  ideas; in  fact, there is  the possibility  of TAATS                                                               
becoming  an extension  course at  the University  of California,                                                               
Davis.   In closing,  Mr. Smith summarized  that an  average 120-                                                               
acre MIG will employ three shifts  of 540 people - with others in                                                               
supporting  services -  for a  total  of 3,000  jobs [slide  24].                                                               
Annual production will be:   9 million gallons of synthetic fuel;                                                               
40  MW of  electricity;  90 million  pounds  of organic  produce,                                                               
which  is enough  to feed  300,000  people; 5  million pounds  of                                                               
fish; and  1.5 million  gallons of potable  water per  day [slide                                                               
23].                                                                                                                            
                                                                                                                                
9:04:24 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES asked  for the  annual operating  costs of                                                               
the facility.                                                                                                                   
                                                                                                                                
MR. SMITH  answered $2.7 million  per year.  In  further response                                                               
to Chair  Hughes, he said  the operating costs  are approximately                                                               
one-third of the total cost  of traditional farming, aquaculture,                                                               
and fuel production methods.                                                                                                    
                                                                                                                                
CO-CHAIR ISAACSON  estimated that producing 9  million gallons of                                                               
synthetic fuel  with $2.7 million  in operating costs  would earn                                                               
$34 million from one revenue stream.                                                                                            
                                                                                                                                
MR. SMITH offered  to provide a summary of cost  breakdowns; on a                                                               
gross  revenue basis,  annual revenue  estimates are  $34 million                                                               
from agriculture and $30 million from energy.                                                                                   
                                                                                                                                
9:08:03 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NAGEAK requested additional  information on how to                                                               
compare revenue streams with those of existing industry.                                                                        
                                                                                                                                
MR. SMITH  gave an example  of fish that  costs an average  of $6                                                               
per pound, and that the MIG can  produce and sell fish for $4 per                                                               
pound, meaning the business model  stands at an approximate 25-26                                                               
[percent] return on investment.   However, the MES business model                                                               
is not to generate a lot of  money, but to develop the ability to                                                               
provide food, power, and water in an economical fashion.                                                                        
                                                                                                                                
CO-CHAIR  ISAACSON acknowledged  the relevancy  of this  topic to                                                               
Alaska and the country.                                                                                                         
                                                                                                                                
9:10:44 AM                                                                                                                    
                                                                                                                                
CO-CHAIR ISAACSON passed the gavel to Chair Hughes.                                                                             
                                                                                                                                
CHAIR   HUGHES  expressed   her   interest   in  receiving   more                                                               
information about the facility in the future.                                                                                   
                                                                                                                                
9:13:03 AM                                                                                                                    
                                                                                                                                
KURTIS  ZELL, Development  Coordinator, Merged  Energy Solutions,                                                               
informed the  committee he is  a resident  of Alaska and  is very                                                               
familiar with  the aviation  industry here.   Mr. Zell  posed the                                                               
question   of   how   to   build   infrastructure   for   energy,                                                               
transportation,   economics,  mining,   or  other   industry,  in                                                               
Alaska's  remote areas.   He  suggested  the use  of airships  is                                                               
applicable for  the oil  and gas and  timber industries,  and for                                                               
alternative  shipping  methods.    Other  uses  include  disaster                                                               
relief  and  medical response.    He  directed attention  to  the                                                               
PowerPoint presentation  entitled, "Transforming  Alaska," adding                                                               
that  airships   bring  opportunities   for  new   jobs  building                                                               
airfields,  because Ted  Stevens Anchorage  International Airport                                                               
could  only  accommodate  five airships,  and  he  suggested  new                                                               
fields in Palmer or Willow would be needed [slides 2-4].                                                                        
                                                                                                                                
CHAIR  HUGHES  asked  for  background  information  on  Sky  Lift                                                               
Aeronautics.                                                                                                                    
                                                                                                                                
9:17:49 AM                                                                                                                    
                                                                                                                                
MR.  SMITH, speaking  as the  chairman of  Sky Lift  Aeronautics,                                                               
said a MES  project in the "north  Pacific" needed transportation                                                               
for fuel to an  area where tanker ships could not  be used.  That                                                               
project  led to  Sky  Lift Aeronautics  partnering with  Lockheed                                                               
Martin Corporation  (Lockheed) to obtain the  worldwide rights to                                                               
the marketing, sales, and leasing of the aircraft.                                                                              
                                                                                                                                
CO-CHAIR  ISAACSON  observed that  mining  in  Alaska is  in  the                                                               
Interior  and  the Far  North,  and  pointed out  that  Fairbanks                                                               
International Airport is very large  and accommodating.  He asked                                                               
if the  ships are not suited  for very cold weather,  and why the                                                               
focus is on Southcentral.                                                                                                       
                                                                                                                                
MR. SMITH  said there is no  need to focus on  one area providing                                                               
there is sufficient population to  staff the maintenance, repair,                                                               
and  operations  (MRO)  station.     The  airships  operate  most                                                               
efficiently  in cold  weather, and  remain  operational within  a                                                               
temperature range of -40 degrees to 160 degrees Fahrenheit.                                                                     
                                                                                                                                
CO-CHAIR  ISAACSON  encouraged  the  presenters to  look  at  the                                                               
Interior for staging the aircraft.                                                                                              
                                                                                                                                
9:22:55 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NAGEAK inquired as to the size of the aircraft.                                                                  
                                                                                                                                
MR. SMITH responded  that at this time the  aircraft are designed                                                               
in  three variants:   the  500-ton  hybrid aircraft  will have  a                                                               
payload  of 300  automobiles,  and its  dimensions  are 742  feet                                                               
long, 394  feet wide, and  202 feet  high; the dimensions  of the                                                               
100-ton model  are 423  feet long,  185 feet  wide, and  117 feet                                                               
high; the dimensions  of the 25-ton model are 276  feet long, 157                                                               
feet wide and 75 feet high.                                                                                                     
                                                                                                                                
REPRESENTATIVE NAGEAK  related that the  high cost of  freight is                                                               
hurting those who  live in rural Alaska villages, and  he gave an                                                               
example of the cost of shipping  meat.  The high cost of shipping                                                               
prevents opportunities for every kind  of economic growth, and he                                                               
encouraged the presenters to consider  a route that would service                                                               
all eight villages on the  North Slope, thereby reducing costs to                                                               
the residents.                                                                                                                  
                                                                                                                                
MR. SMITH pointed out the  advantages of the hybrid aircraft over                                                               
fixed-wing aircraft  are the  costs of fuel  and operation.   The                                                               
cost of operation  is about one-eighth, and the  dynamics of this                                                               
type of aircraft - equipped  with 450-cubic-inch Mercedes engines                                                               
powered  by  diesel  fuel  -  allows  for  more  efficiency  than                                                               
transportation  by fixed-wing  aircraft or  barge.   Further, the                                                               
hybrid aircraft  cost less money  and have twice the  capacity of                                                               
most fixed-wing aircraft.                                                                                                       
                                                                                                                                
9:29:19 AM                                                                                                                    
                                                                                                                                
MR.  ZELL,  in response  to  Chair  Hughes, explained  after  the                                                               
agreement  with Lockheed  is finalized,  Lockheed will  build the                                                               
25-ton  model  and  the  aircraft  will  be  seen  in  Alaska  by                                                               
February,  2015.    In  further  response  to  Chair  Hughes,  he                                                               
clarified that the  only aircraft of this type  that Lockheed has                                                               
built is  an 80-foot-long  hybrid which is  not in  commercial or                                                               
military application, but is an experimental aircraft.                                                                          
                                                                                                                                
REPRESENTATIVE  HIGGINS  asked  for   the  altitude  and  weather                                                               
conditions under which the aircraft can fly.                                                                                    
                                                                                                                                
MR. ZELL  answered that  the ceiling is  20,000 feet  and ideally                                                               
the  airships fly  at 10,000-15,000  feet.   Almost  any type  of                                                               
weather  condition is  acceptable except  for extreme  headwinds,                                                               
which are  not expected at  flying altitude.   Mr. Zell  said the                                                               
manufacturer expects  to increase  the horsepower of  the engines                                                               
to address  the issue  of strong  winds.   He returned  to mining                                                               
applications such as  those needed for the  proposed Pebble Mine,                                                               
the NOVAGOLD Donlin  Gold mine, and the mines in  Nome [slide 5].                                                               
He   stressed   that   shipping,  transportation,   and   freight                                                               
applications  would make  sense  for rural  Alaska, and  airships                                                               
would  serve as  safe alternatives  to ice  road trucking  to and                                                               
from the North Slope [slides 6 and 7].                                                                                          
                                                                                                                                
CO-CHAIR ISAACSON asked for the range of an airship.                                                                            
                                                                                                                                
9:33:59 AM                                                                                                                    
                                                                                                                                
MR. ZELL  responded that a 25-ton  aircraft has a range  of about                                                               
1,400  nautical miles  carrying a  net payload  of about  40,000-                                                               
50,000  pounds.   He  cautioned  that the  flight  time would  be                                                               
regulated  by  the  certification  from the  U.S.  Department  of                                                               
Transportation,  Federal  Aviation   Administration  (FAA).    In                                                               
further  response to  Co-Chair Isaacson,  he  confirmed that  the                                                               
aircraft  could "cover"  Alaska and  upper Canada;  in fact,  the                                                               
100-ton model  will have  a range of  about 3,000  nautical miles                                                               
and the 500-ton  model will have a range of  about 6,000 nautical                                                               
miles.                                                                                                                          
                                                                                                                                
CO-CHAIR ISAACSON  surmised the 100-ton model  should travel from                                                               
Fairbanks to the end of the Aleutian Island chain.                                                                              
                                                                                                                                
MR. ZELL said correct.                                                                                                          
                                                                                                                                
9:35:53 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HIGGINS asked about the safety of the airships.                                                                  
                                                                                                                                
MR. ZELL  said the  manufacturer has performed  many tests.   The                                                               
helium  is  compartmentalized  inside  the balloon  part  of  the                                                               
airship,  thus it  can maintain  loft  with a  certain number  of                                                               
breaks in the  skin as a result of gunfire.   In further response                                                               
to Representative  Higgins's question  related to  combustion, he                                                               
said  he  was  unaware  of   any  "massive"  problems  caused  by                                                               
electrical strikes.   In response  to Chair Hughes,  he confirmed                                                               
that  hydrogen  is  highly  explosive  but helium  is  not.    In                                                               
response to Representative Nageak, he said the speed of the 25-                                                                 
ton model is about 70 knots.                                                                                                    
                                                                                                                                
MR. SMITH  assured the  committee that  lightning has  no adverse                                                               
effect  on the  airship  as  it is  not  constructed of  aluminum                                                               
framing, but  in each lobe of  the aircraft there is  a ballonet,                                                               
which holds three  internal bladders filled with air.   Helium is                                                               
used  for a  structural element  and  creates the  framing in  an                                                               
aerodynamic shape, and the [exterior]  fabric is a polymer, which                                                               
is impervious to  lightning.  The only metal used  is attached to                                                               
the bottom of the vehicle.                                                                                                      
                                                                                                                                
9:41:30 AM                                                                                                                    
                                                                                                                                
MR. ZELL  returned to the  presentation and advised  MES believes                                                               
the airships could transport oil  and liquefied natural gas (LNG)                                                               
from   Prudhoe  Bay   to   Valdez  in   a   more  efficient   and                                                               
environmentally friendly  method than  through a  pipeline [slide                                                               
10].                                                                                                                            
                                                                                                                                
CHAIR HUGHES referred to slide 9  and asked for an explanation of                                                               
the scenes depicted.                                                                                                            
                                                                                                                                
9:42:54 AM                                                                                                                    
                                                                                                                                
MR. ZELL said  the airship depicted is either the  25-ton or 100-                                                               
ton model;  better renderings  are on slides  29-33.   In further                                                               
response to  Chair Hughes he  said the  pilot sits in  the front.                                                               
He then  pointed out the airship  can land on the  ground, water,                                                               
or snow, and  only requires a 1,500 foot "strip"  for landing and                                                               
takeoff.                                                                                                                        
                                                                                                                                
REPRESENTATIVE HIGGINS  asked how much  helium is needed  for the                                                               
25-ton model.                                                                                                                   
                                                                                                                                
MR. ZELL was unsure.  Returning  to the transportation of oil and                                                               
gas, he  provided an  image of an  airship designed  to transport                                                               
LNG [slide  15].  He  suggested that  airships could be  a viable                                                               
alternative  for  the transport  of  goods,  people, and  freight                                                               
throughout  Southeast  Alaska,  rural  areas,  and  the  Aleutian                                                               
Islands  in support  of tourism,  with the  additional option  of                                                               
using  the  airships as  cruise  ships  [slide  16].   There  was                                                               
discussion about  airships as a  possibility for tourism  and for                                                               
the  transport of  passengers,  but the  company  is waiting  for                                                               
guidelines from FAA regarding passenger service.                                                                                
                                                                                                                                
9:51:25 AM                                                                                                                    
                                                                                                                                
MR. SMITH,  in response  to Chair Hughes,  said FAA  will require                                                               
that the airships are in  operation for one year before approving                                                               
a passenger load.  At this  time the 25-ton model is approved for                                                               
up to 15 passengers.  In  further response, he confirmed that the                                                               
500-ton model will carry 2,200 passengers.                                                                                      
                                                                                                                                
MR.  ZELL restated  the multiple  applications for  the aircraft:                                                               
tourism; disaster relief; emergency  medical response; as part of                                                               
the Alaska  Marine Highway  System; support for  the oil  and gas                                                               
industry;  and to  lower the  cost of  in-state and  out-of-state                                                               
shipping, especially for rural Alaska.                                                                                          
                                                                                                                                
REPRESENTATIVE  PRUITT  asked whether  an  airship  could lift  a                                                               
drill-rig out  to a site, and  how the cost would  compare to the                                                               
cost of normal transportation over an ice road.                                                                                 
                                                                                                                                
MR. ZELL  was unsure of the  weight of a drill-rig;  however, the                                                               
airship can be used  as a crane, thus portions of  a rig could be                                                               
transported outside of  the cargo bay.  He said  he was unsure of                                                               
what  producers  pay  to  transport  drill-rigs  by  conventional                                                               
shipping methods.                                                                                                               
                                                                                                                                
9:58:14 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRUITT  inquired as  to whether MES  has potential                                                               
clients in  Alaska.  He asked  when and where MES  is prepared to                                                               
provide services.                                                                                                               
                                                                                                                                
MR. ZELL closed by saying that  MES is moving forward quickly and                                                               
aggressively with its manufacturer.   The timeline is to have the                                                               
airship flying  within 12  months.  There  has been  contact with                                                               
logistics and  mining companies in  Alaska who are  interested in                                                               
the future of the airship.                                                                                                      
                                                                                                                                
10:00:00 AM                                                                                                                   
                                                                                                                                
MR.  SMITH added  that MES  has had  discussions with  Lynden Air                                                               
Cargo and others,  and as soon as the agreement  with Lockheed is                                                               
finalized, MES  will present its  full marketing strategy  to all                                                               
of the interested clients in Alaska.                                                                                            
                                                                                                                                
10:02:07 AM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the joint                                                               
meeting of  the House Special  Committee on Energy and  the House                                                               
Special  Committee on  Economic Development,  Trade, and  Tourism                                                               
was adjourned at 10:02 a.m.                                                                                                     

Document Name Date/Time Subjects
ENE -PRESENTATION - MES-MIG Presentation (03-03-14).pptx HENE 3/3/2014 8:00:00 AM
ENE - PRESENTATION - Transforming Alaska (6).pdf HENE 3/3/2014 8:00:00 AM
ENE - AGENDA - Joint Hearing with HEDT&T (03-03-14).pdf HENE 3/3/2014 8:00:00 AM