Legislature(2015 - 2016)CAPITOL 17
03/24/2015 10:15 AM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| HB118 | |
| Presentation: Resources Energy, Inc. | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | HB 118 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
March 24, 2015
10:16 a.m.
MEMBERS PRESENT
Representative Jim Colver, Co-Chair
Representative Liz Vazquez, Co-Chair
Representative Benjamin Nageak
Representative David Talerico
Representative Cathy Tilton
Representative Matt Claman
Representative Adam Wool
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 118
"An Act adopting the Municipal Property Assessed Clean Energy
Act; authorizing municipalities to establish programs to impose
assessments for energy improvements in regions designated by
municipalities; imposing fees; and providing for an effective
date."
- MOVED CSHB 118(ENE) OUT OF COMMITTEE
PRESENTATION: RESOURCES ENERGY~ INC.
- HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 118
SHORT TITLE: MUNI ENERGY IMPROVEMNT ASSESSMNTS/BONDS
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/18/15 (H) READ THE FIRST TIME - REFERRALS
02/18/15 (H) ENE, CRA, FIN
03/05/15 (H) ENE AT 10:15 AM CAPITOL 106
03/05/15 (H) Heard & Held
03/05/15 (H) MINUTE(ENE)
03/17/15 (H) ENE AT 10:15 AM CAPITOL 17
03/17/15 (H) Heard & Held
03/17/15 (H) MINUTE(ENE)
03/24/15 (H) CRA AT 8:00 AM BARNES 124
03/24/15 (H) ENE AT 10:15 AM CAPITOL 17
WITNESS REGISTER
GENE THERRIAULT, Deputy Director for Energy Policy and Outreach
Alaska Energy Authority
Department of Commerce, Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: Speaking on behalf of the administration,
explained changes in the proposed committee substitute for HB
118.
MARY ANN PEASE, Vice President & General Manager
Resources Energy, Inc.
Anchorage, Alaska
POSITION STATEMENT: Provided a PowerPoint presentation entitled
"REI Update" and dated 3/24/15.
EIJI MAEZAWA, Executive Vice President & Chief Operating Officer
Resources Energy, Inc.
Anchorage, Alaska
POSITION STATEMENT: Participated in the PowerPoint presentation
by Resources Energy, Inc.
ACTION NARRATIVE
10:16:34 AM
CO-CHAIR JIM COLVER called the House Special Committee on Energy
meeting to order at 10:16 a.m. Representatives Nageak,
Talerico, Tilton, Vazquez, and Colver were present at the call
to order. Representatives Wool and Claman arrived as the
meeting was in progress.
HB 118-MUNI ENERGY IMPROVEMNT ASSESSMNTS/BONDS
10:17:05 AM
CO-CHAIR COLVER announced that the first order of business would
be HOUSE BILL NO. 118, "An Act adopting the Municipal Property
Assessed Clean Energy Act; authorizing municipalities to
establish programs to impose assessments for energy improvements
in regions designated by municipalities; imposing fees; and
providing for an effective date."
10:18:44 AM
CO-CHAIR VAZQUEZ moved to adopt the proposed committee
substitute (CS) for HB 118, labeled 29-GH1021\W, Shutts,
3/21/15, as the work draft.
10:18:51 AM
CO-CHAIR COLVER objected.
10:18:58 AM
GENE THERRIAULT, Deputy Director for Energy Policy and Outreach,
Alaska Energy Authority (AEA), Department of Commerce, Community
& Economic Development (DCCED), reminded the committee that at
the hearing on 3/17/15, two proposed amendments to HB 118 were
incorporated into one motion and adopted. However, in order to
explain how both amendments were included in Version W of the
bill, he addressed both of the amendments separately as they
were labeled on 3/17/15. The amendment previously labeled 29-
GH1021\A. 1, Shutts, 3/11/15 read:
Page 1, following line 5:
Insert a new bill section to read:
"* Section 1. AS 29.10.200 is amended by adding a
new paragraph to read:
(65) AS 29.49 (energy improvement assessment
programs)."
Page 1, line 6:
Delete "Section 1"
Insert "Sec. 2"
Renumber the following bill section accordingly.
Page 10, following line 12:
Insert a new section to read:
"Sec. 29.49.890. Application of chapter. This
chapter applies to home rule and general law
municipalities."
MR. THERRIAULT said the first part of the foregoing amendment is
found in the proposed CS on page 1, lines 6 and 7, and the
second part appears on page 10, beginning on line 31; AEA agreed
that the language of the amendment has been properly
incorporated into the bill. The amendment previously labeled
29-GH1021\A.3, Shutts, 3/16/15 read:
Page 4, lines 9 - 10:
Delete "as provided by"
Insert "required under"
Page 4, line 14, following "(I)":
Delete "a"
Page 4, line 19:
Delete ", including the report required by"
Insert "and the report required under"
Page 4, line 20:
Delete "a resolution"
Insert "an ordinance"
Page 4, line 22:
Following "report":
Insert "required"
Following "AS 29.49.070":
Insert ", which may be incorporated by reference"
Page 4, lines 25 - 29:
Delete all material.
Reletter the following subsections accordingly.
MR. THERRIAULT directed attention to Version W, page 4, line 30,
and stated that the word "resolution" has been replaced with the
word "ordinance," and on page 5, lines 5-9, language has been
struck. Again, AEA agreed that the amendment has been properly
incorporated. The CS also includes a number of other small,
stylistic changes recommended by Legislative Legal Services
(LLS), Legislative Affairs Agency. Finally, LLS suggested - and
AEA agreed - that remaining questions about the bill regarding
the proposed powers of municipalities could be addressed in the
next committee of referral, the House Community and Regional
Affairs Standing Committee. In that regard, Mr. Therriault
advised that the administration has no intention to expand a
municipality's power of taxation beyond that which already
exists.
10:22:25 AM
CO-CHAIR VAZQUEZ directed attention to letters in the committee
packet from the Alaska Bankers Association and AEA in support of
the bill. She read a letter from the Alaska Bankers Association
dated 3/16/15 in part:
Mortgage holders have a provision that safeguards
their interest starting line 31, page 6: Section
29.49.080. Notice of mortgage holder required for
participation. Before a municipality may enter into a
written contract ... with a record owner of real
property to impose an assessment to repay the
financing of a qualified project under this chapter,
the property owner shall give the holder of a mortgage
lien on the property at least 30 days' written notice.
CO-CHAIR VAZQUEZ suggested the following technical change: by
certified mail.
10:24:08 AM
CO-CHAIR COLVER removed his objection. Co-Chair Colver [moved
to report CSHB 118, Version 29-GH1021\W, Shutts, 3/21/15], out
of committee with individual recommendations and the
accompanying zero fiscal note. There being no objection, CSHB
118(ENE) was reported out of the House Special Committee on
Energy.
[Co-Chair Colver passed the gavel to Co-Chair Vazquez.]
10:25:19 AM
The committee took an at ease from 10:25 a.m. to 10:32 a.m.
^PRESENTATION: RESOURCES ENERGY, INC.
PRESENTATION: RESOURCES ENERGY, INC.
10:32:14 AM
CO-CHAIR VAZQUEZ announced that the next order of business would
be a presentation by Resources Energy, Inc.
10:33:04 AM
MARY ANN PEASE, Vice President & General Manager, Resources
Energy, Inc. (REI), informed the committee the [Fukushima
Daiichi nuclear disaster] in March 2011, was the starting point
for REI due to the Japanese government's interest in replacing
nuclear power with imported liquefied natural gas (LNG) in
Japan. Alaska came to the forefront as a source for LNG because
of a long history of participation by trading houses in the
Trans-Alaska Pipeline System (TAPS). The focus of the project
has now become the Cook Inlet because of its stranded gas
reserves, demand for its gas from the utilities, and the
incentive for increased exploration and development that would
come with a small-scale export project planning to deliver gas
to market prior to 2020. She noted that the proposed plant
would deliver LNG not only to the export market, but also to
demands for LNG within Alaska (slide 3).
10:35:43 AM
MS. PEASE advised there are government to government agreements
in place between the Alaska Industrial Development and Export
Authority (AIDEA), Department of Commerce, Community & Economic
Development (DCCED), the governor's office, and the Department
of Natural Resources (DNR), along with agreements with several
Native organizations. In addition, proposed Japanese buyers
include city gas and electric utilities, and industrial users in
a changing marketplace in Japan for LNG. Joint venture partners
are an important component of the project - in Japan and in the
U.S. (slide 4). Ms. Pease presented a timeline of REI's
activities dating from 2011 through 2014. Most recently, in
December 2014, REI signed a cooperation agreement with the
governor's office and continues to work under a cost
reimbursement agreement with AIDEA. These agreements have
provided beneficial analyses on economic options for the project
(slide 5). Resource Energy Inc.'s proposed Greenfield LNG plant
would be located on private land adjacent to Port MacKenzie, and
geotechnical work has begun at the site to ensure that soil
conditions are appropriate. Also, Cook Inlet reservoir and
production analyses have been completed. Ms. Pease pointed out
that the timeline is critical in order to ensure that the
project can deliver LNG for export to Japan by 2020 (slide 6).
A recent U.S. Geological Survey report showed Cook Inlet holds
19 trillion cubic feet (tcf) of gas potential, but to realize
this potential Cook Inlet producers need to aggregate production
and bring together smaller independent producers. This is an
opportunity for independent Cook Inlet producers including
NordAq Energy Inc., Cook Inlet Energy, Furie Operating Alaska,
Buccaneer Energy/Cosmopolitan, and Hilcorp Alaska. She
acknowledged that the production from individual companies, with
the exception of Hilcorp, could not supply 160 million cubic
feet per day of gas (mmcfd) which is needed for the proposed
project, therefore the project requires an aggregation concept.
Some of the required infrastructure is already in place, such as
that of the electric utilities, although the proposed location
in Port MacKenzie would require an additional nine miles of
pipeline to bring the gas to tidewater (slides 7 and 8). A
detailed reservoir, economic, and production study demonstrated
on a proved and probable (2P) basis that the range of reserves
in the Cook Inlet would be sufficient to meet the utility demand
of the Railbelt for 20-25 years, in addition to the demand of
the LNG export project. She restated REI's guiding principle
that gas needed in Alaska can be taken from the proposed plant
at any time (slide 9). A graph showed the results of the
reserve study completed by Dr. Michael Donnelly, Global Energy
Consultancy (slide 10). Ms. Pease observed that additional
drilling and exploration by independents would produce excess
reserves that would be available for the base furthload of the
project; in addition, other areas would be opened to exploration
by the completion of a new pipeline.
10:43:06 AM
MS. PEASE turned to the concept of building a module LNG plant.
Studies have suggested considering the General Electric Oil &
Gas (GE) module LNG plant, and the Samsung Heavy Industries and
Air Products and Chemicals, Inc. (APCI) modules (slide 11). She
explained that modular construction is preferred for Cook Inlet
due to the cost of labor, engineering, and design needed to
construct a "stick built" facility. Modular units are easy to
transport and deploy (slide 12).
REPRESENTATIVE CLAMAN asked for an estimate of the cost of the
LNG facility.
MS. PEASE said the current cost estimate for the LNG plant is at
a plus or minus 50 percent; after the front-end engineering
design (FEED) phase, the cost estimate improves to plus or minus
10 percent. At this time, the estimate is $1.8 billion to build
a one million ton plant, which is approximately the same size as
the existing ConocoPhillips Alaska, Inc. plant in Kenai. In
further response to Representative Claman, she agreed that the
plant is considerably smaller than that of the Alaska LNG
(AKLNG) project.
MS. PEASE restated the importance of a smaller project that can
be started in a short period of time to continue Alaska's
relationship in exporting LNG to Japan for the last 45 years.
She identified contractors that are providing technical and
feasibility services (slide 13). Turning to the project
schedule, she pointed out that June 2015, is the target for the
start of FEED. The project is in contact with the Federal
Energy Regulatory Commission (FERC) and the U.S. Department of
Energy (DOE), and anticipates pre-filing the DOE application in
2015 as well. Pre-filing and formal application to FERC are
targeted for 2016, and the engineer, procurement, and
construction (EPC) contract is targeted for 2017-2018 (slide
14). Advantages that Alaska holds over competitors are: forty-
five year track record of delivering LNG to Japan; shipping
time of nine days; avoid Panama Canal toll which adds a
surcharge; no controversy over conventional gas (slide 15).
10:49:09 AM
CO-CHAIR COLVER asked about competition from British Columbia.
MS. PEASE said REI is closely monitoring Canadian projects;
however, Japanese buyers have seen delays in Canada and some
projects have stalled due to First Nation issues, thus there is
uncertainty, and a strong focus remains on a supply from Alaska.
Although projects in Texas, Louisiana, and Oregon may be
competitive, all have problems with the applicable regulatory
regimes and high construction costs. She has heard that a
small, modularized approach - that can expand - is the wave of
the future; furthermore, LNG projects look at a 20-year supply.
REPRESENTATIVE WOOL asked how much LNG is currently exported
from Alaska to Japan.
MS. PEASE will supply this information to the committee.
10:52:34 AM
MS. PEASE, in response to Co-Chair Vazquez, said Alaska's track
record with Japan stems from the existing ConocoPhillips Alaska,
Inc. plant in Cook Inlet which provided an uninterrupted supply
of gas. She opined Japan's industry and its utilities are
interested in continuing this relationship.
10:54:00 AM
EIJI MAEZAWA, Executive Vice President & Chief Operating
Officer, Resources Energy, Inc., informed the committee the
demand for natural gas worldwide is 260 million metric tonnes
per annum (mmtpa), of which Asia buys 65 percent (slide 17). At
this time, about 86 mmtpa of LNG are imported to Japan, although
between 2012 and 2015 demand is in decline due to the Fukushima
Daiichi nuclear disaster. Mr. Maezawa said the demand will
return to a normal level of about 76 mmtpa in 2015, and by 2020
there will be a gap between supply and demand of 8 mmtpa, which
is a window of opportunity for the REI project.
MS. PEASE pointed out the 8 [mmtpa] gap in 2020 increases to
over 51 mmtpa in 2030 (slide 17).
MR. MAEZAWA, in response to Co-Chair Vazquez, provided a brief
background of his experience working on international gas
projects in Indonesia, Malaysia, and Canada. He also worked for
a Japanese oil and gas exploration company, and has 40 years of
experience in oil projects, and 30 years of experience in all
facets of the LNG industry worldwide.
10:59:49 AM
REPRESENTATIVE CLAMAN asked for the cause of the declining
supply of LNG as shown on slide 17.
MR. MAEZAWA explained that some of the supply gap is due to the
potential expiration of existing long-term contracts. For
example, Indonesian long-term contracts will expire in 2025, so
Alaska must compete with other countries that can be expand and
extend existing contracts.
REPRESENTATIVE CLAMAN observed that the chart illustrates
contracts that are expiring, but is not a projection of a
decline in the worldwide supply of natural gas.
MR. MAEZAWA presented a graph comparing the price of LNG in
Japan, the United Kingdom, and the U.S. from 2001 to 2014, prior
to the decline of crude oil prices. In October 2014, the landed
price of LNG in Japan cost about $16 per million British thermal
units (mmBtu). In comparison with the Henry Hub price of about
$4 per mmBtu, the cost in Japan is much higher. At this time,
the price is about $10 per mmBtu in Japan (slide 18).
CO-CHAIR COLVER asked for an overview of how competitive the
price of Alaska's gas must be to compete with Japan's other
sources such as Australia and Qatar.
MR. MAEZAWA said marine transportation is nearest from Alaska to
Japan, and estimated the transportation cost to Japan from
Alaska to be between $1 per mmBtu to $2 per mmBtu, compared to
$3 per mmBtu for gas transported through the Panama Canal.
11:04:00 AM
CO-CHAIR COLVER surmised REI is looking for a gas supply from
Alaska because Alaska gains a $2 per mmBtu advantage in marine
transportation over the West Coast.
MR. MAEZAWA advised this is one advantage from the Japanese
point of view, in addition, Japanese buyers need a stable price
and long-term contracts.
CO-CHAIR VAZQUEZ raised the importance of national security to
purchasers.
MR. MAEZAWA said that is the most important aspect.
CO-CHAIR COLVER inquired as to the status of negotiations with
Cook Inlet producers for long-term supplies of gas for the
proposed plant.
11:05:54 AM
MS. PEASE said discussions with Cook Inlet producers are very
positive, and REI has letters of interest in supplying gas to
the project for export; the project is not through FEED stage,
although positive discussions continue with every one of the
Cook Inlet producers.
REPRESENTATIVE WOOL returned attention to slide 17, and
questioned whether the price Alaska could offer for long-term
contracts in 2025 would be a factor.
MS. PEASE said absolutely.
REPRESENTATIVE WOOL directed attention to slide 18, and asked
whether the decline in the price of Japanese LNG Cocktail (JLC)
is due to the decline in the price of crude oil, or due to
transportation cost.
MR. MAEZAWA said the price of Japanese LNG Cocktail is based on
the price of Japan Crude Cocktail (JCC). There is a mitigation
mechanism in the pricing formula - to protect the seller and the
buyer - through the negotiation of long-term contracts.
11:09:24 AM
MS. PEASE added that at the LNG Producer-Consumer Conference
2014, held in Tokyo, LNG buyers and governmental entities
discussed the need for a new competitive-based LNG pricing
formula. The traditional link to oil prices is changing as
Japan has invested in many projects, which serves to bring down
the prices.
11:11:03 AM
The committee took an at ease from 11:11 a.m. to 11:23 a.m.
11:23:29 AM
MR. MAEZAWA provided a map that illustrated the electric power
and city gas companies from Hokkaido Electric Power to Kyushu
Electric Power (slide 19).
MS. PEASE pointed out a typographical error on slide 19: Sudan
should read Oman.
MR. MAEZAWA said Tokyo Electric Power and Chubu Electric Power
recently merged for the joint procurement of LNG. The two
companies entered in a joint venture agreement, and he
characterized this as a major event related to power companies
in Japan. It is anticipated that in 10 years, Japan's total LNG
imports will be about 90 mmtpa, of which Tokyo Electric and
Chubu Electric demand would be 40 mmtpa (slide 20).
MR. MAEZAWA noted that REI is focusing on providing to the Kyoto
and Hyogo Prefecture Governments one million tons of LNG from
Cook Inlet after the deregulation of electricity and city gas
business in 2020 (slide 20). He pointed out that after 2016,
retail markets will be open to competition, and in 2017, city
gas retail markets will be open; in 2020, there will be an
"unbundling of electricity transmission lines." This means the
electric power transmission lines will be utilized by third
parties, and there will be third party access to LNG terminals.
Thus the prefecture governments have taken the initiative to
form a private public partnership (PPP) to construct an LNG
terminal and power plant to consume about one million tons of
LNG from Cook Inlet (slide 33). In Japan, most LNG terminals
are located on the Pacific Ocean. After the Fukushima disaster,
the Japanese government took the initiative to strengthen a
national resilience plan, and one step is to construct an LNG
terminal. The project will consist of a terminal and a power
plant for city gas and industrial gas sales. The prefecture
also will form a PPP project (slide 20). The basic business
model is to form a PPP-type organization for an LNG project in
the cities of Maizuru in the Kyoto Prefecture and in the city of
Hirohata in the Hyogo Prefecture. The LNG receiving volume
will be 500,000 tons for each city. The total cost of the
receiving terminals and power plants on the Japan seaside is
equal to $1 billion for each project. In addition, a 100
kilometer pipeline is planned from Kyoto to Hyogo (slide 21).
11:32:06 AM
MS. PEASE pointed out that in terms of the proposed project
structure, there are many needed components. For the
liquefaction facility, in addition to the Japanese investors,
there will have to be a competent U.S. operator joining with REI
on the project, a consortium of Japanese banks participating in
the project, and other equity investors from the U.S. and Japan.
Other components necessary are the gas suppliers from Cook Inlet
and, later on, from other parts of Alaska such as the Foothills
region (slide 22).
CO-CHAIR COLVER asked about REI's corporate ownership structure.
MS. PEASE answered REI is a Delaware-based corporation with
offices in Anchorage. The corporation is wholly owned by Energy
Resources, Inc., (ERI) in Tokyo. The Hyogo Prefecture
Governments established ERI, along with other Japanese investors
and corporations. Energy Resources, Inc. has a board of
directors, and the project is being driven by its investors and
buyers interested in seeing if the project is economically
viable in terms of delivering LNG to Japan. Involved are the
governments of Kyoto and Hyogo, many industrial customers, the
city and gas companies, and other entities.
CO-CHAIR COLVER asked about the source of REI's capital and its
access to equity resources for this project.
MR. MAEZAWA said ERI shareholders are from one of the biggest LP
gas wholesalers in Japan, are who are interested in new business
with LNG, and other investors are being solicited.
MS. PEASE added that discussions are underway and confidential,
but she assured the committee that the prospective entities are
familiar with Alaska and the project.
CO-CHAIR VAZQUEZ asked for the estimated cost of the project.
11:36:18 AM
MS. PEASE described the project in three parts: The first part
is the upstream side which can happen by acquisition, a farm-in
agreement, or gas sales contracts. The cost of an acquisition
would be approximately a $1 billion investment; on the other
hand, gas sales contracts would be based on the price of gas.
The other part of the project is the LNG plant including
storage, power plant, and marine facilities, which have an
approximate cost of $1.8 billion.
MR. MAEZAWA, in further response to Co-Chair Vazquez, said there
are 10 members on the board of directors, with 30 staff members
in Tokyo who are experienced in LNG projects' promotion from
upstream to marketing operations, including engineering and
marine transportation.
CO-CHAIR VAZQUEZ asked what interests are represented by the
members of the board.
11:38:24 AM
MR. MAEZAWA said (Indisc.). The REI advisory board chairman is
David Marchin (ph), formerly of Occidental Oil and Gas, [Mr.
Maezawa] is the executive vice president and COO, and Shunichi
Shimizu is president and CEO.
MS. PEASE turned to the subject of the regulatory schedule for
project development. On a positive note, the federal government
will not be an obstacle to Alaska gas exports, although the "all
in" regulatory schedule can take two years. Furthermore, DOE
and FERC have provided valuable guidance to REI on the project
(slide 24-26). Locating at Port MacKenzie is important to REI
because the proposed property is near the existing port, and
would provide easy access to loading and offloading facilities.
She pointed out that an LNG export facility cannot have a joint
use dock, but must use a dedicated barge and dock facility;
however, the dock at Port MacKenzie could be used for
transporting supplies and there is road access and a nearby
workforce (slide 27).
CO-CHAIR COLVER observed that the proposed LNG modular plant
would be sited at Port MacKenzie on private land with its own
dock. Currently, the proposed AKLNG project route is 60 miles
west, and he asked how AKLNG would affect the REI project, and
whether REI could finance a spur pipeline to link the two
proposed projects.
MS. PEASE acknowledged the other proposed projects, AKLNG and
the Alaska Stand Alone Pipeline (ASAP). There is a distance
advantage to connecting with ASAP; however, an additional
pipeline of any distance affects the economics of a project.
Furthermore, agreements are required for an offtake point at any
certain location. She clarified that developing North Slope gas
is complementary to the REI proposal because other regions of
the state have vast gas resources for development.
11:44:57 AM
CO-CHAIR COLVER understood that for AKLNG the state will take 25
percent of its royalty and production taxes in gas, and asked
whether REI seeks to acquire access to royalty gas.
MS. PEASE said no; however, REI participated in two open seasons
and a solicitation of interest on the larger project.
REPRESENTATIVE CLAMAN asked for clarification on the location of
the proposed LNG plant.
MS. PEASE said Port MacKenzie has been chosen as the site.
CO-CHAIR VAZQUEZ asked whether Ms. Pease had studied the beluga
whale population in Cook Inlet and anticipated any related
problems.
11:47:22 AM
MS. PEASE said she has experience in critical habitat and the
Endangered Species Act from her participation in the extensive
studies process for the "ports projects" and the Knik Arm
Crossing. There are clear indications that infrastructure and
critical habitat can coexist if done property. She opined this
is not an obstacle for the project; in fact, accommodations can
be made as this is a land-based project.
REPRESENTATIVE WOOL inquired as to whether the Port of Valdez
was considered by a feasibility study.
MS. PEASE answered that one of REI's first studies identified
Valdez as a preferred option on a much larger-scale project.
MS. PEASE, in response to Co-Chair Vazquez, said the stated
timeframe for completion of the project is to have the first LNG
deliveries in 2020. She returned to the next steps for the
project, pointing out that the KBR Inc. study and cost estimate
have been completed, and the next step is front-end engineering
design (FEED). She restated that REI has acquired a land option
agreement valid through December 2015. Discussions with DOE and
FERC are continuing, and completion of the joint venture
partners are in the final phases. The start date for FEED will
be moved to June, along with definitive market participants,
certainty of gas supply, and financial arrangements (slide 29).
Ms. Pease provided REI contact information to the committee
(slide 30).
MR. MAEZAWA informed the committee that Qatar is currently the
largest supplier of LNG to Japan, closely followed by Australia
(slide 34).
11:52:01 AM
MS. PEASE, in response to Co-Chair Vazquez, said Alaska has the
potential to supply a significant amount. In further response
to Co-Chair Vazquez, she said the constraints to making the
proposed project a bigger project are the quick construction
timeline and utilizing Cook Inlet gas, which is limited and
reserves must be brought into production. The next hurdle is
the alignment of pipelines when North Slope, Foothills, and
outer continental shelf (OCS) gas becomes available. At that
point, modularized facilities can be easily expanded.
CO-CHAIR COLVER asked how the legislature can support the
project.
MS. PEASE said REI has a productive relationship with AIDEA.
She opined the legislature can assist with regulatory hurdles,
and ensure the project has a voice in order to participate with
other pipeline projects. Ms. Pease offered that REI represents
market potential with opportunities for major growth. Working
in concert with ASAP and AKLGN is important, and REI seeks to
inform the other projects of the opportunities presented by the
robust Japan market.
CO-CHAIR VAZQUEZ asked what hurdles arise within the next six
months to one year.
MS. PEASE returned attention to the HDR Regulatory Schedule
which illustrated the regulatory and permitting process (slide
26). There are many entities to contact; she said the Alaska
Gasline Development Corporation is an example of a governmental
entity that is successful in its endeavors, and REI would
benefit from an Alaska-based sponsor to help with permitting
issues such as critical habitat. She expressed her belief that
an export project focused on jobs and economic development, and
that will also provide energy in-state, makes a promise and a
commitment to the state. Finally, Japanese engineers have a
working knowledge of how to transport LNG in intermodal shipping
(ISO) containers on railcars, barges, and trucks.
11:58:44 AM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 11:58 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| March Legislative Presentation.pdf |
HENE 3/24/2015 10:15:00 AM |
|
| HB 118 - Leg Legal Memo 15-197.dla.pdf |
HENE 3/24/2015 10:15:00 AM |
HB 118 |
| HB 118 Compare 29-GH1021_A and 29-GH1021_W.pdf |
HENE 3/24/2015 10:15:00 AM |
HB 118 |
| HB 118 Proposed CS ver. W.pdf |
HENE 3/24/2015 10:15:00 AM |
HB 118 |