Legislature(2013 - 2014)HOUSE FINANCE 519

03/26/2013 01:30 PM FINANCE


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01:39:16 PM Start
01:40:49 PM HB4
02:53:27 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 4 IN-STATE GASLINE DEVELOPMENT CORP TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 26, 2013                                                                                            
                         1:39 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:39:16 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 1:39 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Alan Austerman, Co-Chair                                                                                         
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Mark Neuman, Vice-Chair                                                                                          
Representative Mia Costello                                                                                                     
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative Lindsey Holmes                                                                                                   
Representative Scott Kawasaki, Alternate                                                                                        
Representative Cathy Munoz                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative David Guttenberg                                                                                                 
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
John Davies,  Fairbanks North  Star Borough,  Fairbanks; Tim                                                                    
Navarre, Council  Member, City  of Kenai and  Co-Chair, ASAP                                                                    
Community  Advisory  Council,   Kenai;  Representative  Mike                                                                    
Hawker,  Sponsor;  John  Bitney, State  Government  Liaison,                                                                    
North   Slope   Borough;  Representative   Mike   Chennault;                                                                    
Representative Bob Herron.                                                                                                      
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Rick  Rogers,   Executive  Director,   Resource  Development                                                                    
Council,  Anchorage; Ron  Long,  Alaska Gasline  Development                                                                    
Corporation   Community  Advisory   Council,  Seward;   Bill                                                                    
Sheffield, Former  Governor of Alaska, Juneau;  David Pruhs,                                                                    
Self,  Fairbanks;   Bob  Shefchik,  Chair,   Chamber  Energy                                                                    
Committee and Chair, Interior  Gas Utility Board, Fairbanks;                                                                    
Jim  Plaquet, Alaska  Support Industry  Alliance, Fairbanks;                                                                    
Jomo  Stewart, Fairbanks  Economic Development  Corporation,                                                                    
Fairbanks;   Merrick   Peirce,  Self,   Fairbanks;   Deantha                                                                    
Crockett,  Executive Director,  Alaska Miner's  Association,                                                                    
Anchorage;  Alan  LeMaster,  Director,  Alaska  Natural  Gas                                                                    
Pipeline  Coalition,  Copper  Valley; Jason  Hoke,  Regional                                                                    
ARDOR,   Copper  Valley   Development  Association,   Copper                                                                    
Valley; Ken  Hall, Self,  Fairbanks; Todd  Wegner, Assistant                                                                    
City Manager, Valdez; Tom Maloney, Self, Anchorage.                                                                             
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 4      IN-STATE GASLINE DEVELOPMENT CORP                                                                                     
                                                                                                                                
          HB 4 was HEARD and HELD in committee for further                                                                      
          consideration.                                                                                                        
                                                                                                                                
HOUSE BILL NO. 4                                                                                                              
                                                                                                                                
     "An  Act relating  to  the  Alaska Gasline  Development                                                                    
     Corporation;  making  the  Alaska  Gasline  Development                                                                    
     Corporation,  a   subsidiary  of  the   Alaska  Housing                                                                    
     Finance Corporation, an  independent public corporation                                                                    
     of  the state;  establishing  and relating  to the  in-                                                                    
     state  natural   gas  pipeline  fund;   making  certain                                                                    
     information  provided  to  or  by  the  Alaska  Gasline                                                                    
     Development  Corporation exempt  from  inspection as  a                                                                    
     public record;  relating to the Joint  In-State Gasline                                                                    
     Development  Team;  relating   to  the  Alaska  Housing                                                                    
     Finance Corporation;  relating to judicial review  of a                                                                    
     right-of-way lease or an action  or decision related to                                                                    
     the  development  or  construction  of an  oil  or  gas                                                                    
     pipeline  on state  land; relating  to the  lease of  a                                                                    
     right-of-way   for   a  gas   pipeline   transportation                                                                    
     corridor,  including  a  corridor  for  a  natural  gas                                                                    
     pipeline that  is a contract  carrier; relating  to the                                                                    
     cost   of  natural   resources,  permits,   and  leases                                                                    
     provided    to   the    Alaska   Gasline    Development                                                                    
     Corporation;  relating  to  procurement by  the  Alaska                                                                    
     Gasline  Development   Corporation;  relating   to  the                                                                    
     review  by  the  Regulatory  Commission  of  Alaska  of                                                                    
     natural gas  transportation contracts; relating  to the                                                                    
     regulation by  the Regulatory  Commission of  Alaska of                                                                    
     an in-state  natural gas pipeline project  developed by                                                                    
     the  Alaska Gasline  Development Corporation;  relating                                                                    
     to  the  regulation  by the  Regulatory  Commission  of                                                                    
     Alaska  of  an  in-state   natural  gas  pipeline  that                                                                    
     provides transportation by  contract carriage; relating                                                                    
     to  the  Alaska   Natural  Gas  Development  Authority;                                                                    
     relating to the procurement  of certain services by the                                                                    
     Alaska  Natural  Gas Development  Authority;  exempting                                                                    
     property of  a project developed by  the Alaska Gasline                                                                    
     Development Corporation from  property taxes before the                                                                    
     commencement  of commercial  operations; and  providing                                                                    
     for an effective date."                                                                                                    
                                                                                                                                
Co-Chair  Stoltze  noted  the presence  of  Representative's                                                                    
Herron, Hawker,  and Chenault. He  discussed the  agenda for                                                                    
the afternoon.                                                                                                                  
                                                                                                                                
1:40:49 PM                                                                                                                    
                                                                                                                                
JOHN DAVIES, FAIRBANKS NORTH  STAR BOROUGH, FAIRBANKS, spoke                                                                    
in  favor of  the  legislation. He  pointed  to a  Fairbanks                                                                    
North  Star  Borough  Assembly  resolution  related  to  the                                                                    
assembly's  2013 legislative  priorities; the  list included                                                                    
an  instate  gas pipeline  that  would  deliver gas  to  the                                                                    
Interior  and  other  state regions.  He  relayed  that  the                                                                    
borough was  in favor of  any solution that would  bring gas                                                                    
to the Interior.  He referred to the  assembly's support for                                                                    
separate legislation  that offered a near-term  solution via                                                                    
the trucking  of liquid natural  gas (LNG) to  the Interior.                                                                    
The assembly  was supportive  of an LNG  line to  Valdez. He                                                                    
stressed that the need was immediate.                                                                                           
                                                                                                                                
Representative  Gara asked  how  Mr. Davies  would view  the                                                                    
option of  a larger  pipeline to  Valdez that  would provide                                                                    
cheaper  in-state  gas  and increased  revenue.  Mr.  Davies                                                                    
replied that  a larger or  smaller pipeline option  would be                                                                    
fine.  He   noted  that  there   would  be   advantages  and                                                                    
disadvantages to either option.  The borough believed it was                                                                    
most important to move forward to address the need.                                                                             
                                                                                                                                
Co-Chair  Stoltze asked  for verification  that the  borough                                                                    
preferred a plan that would  bring gas to Fairbanks by 2015.                                                                    
Mr. Davies responded in the affirmative.                                                                                        
                                                                                                                                
1:45:51 PM                                                                                                                    
                                                                                                                                
TIM  NAVARRE, COUNCIL  MEMBER, CITY  OF KENAI  and CO-CHAIR,                                                                    
ASAP  COMMUNITY ADVISORY  COUNCIL, testified  in support  of                                                                    
the legislation.  He shared  that the  ASAP council  had met                                                                    
throughout the state to gain  information for the public. He                                                                    
believed  HB  4  was  the   right  move.  He  applauded  the                                                                    
legislature  for  bringing the  issue  forward  in 2009.  He                                                                    
discussed that  in 2009 Southcentral utilities  had not been                                                                    
looking at importing LNG and  Fairbanks had not been looking                                                                    
at a  25 CMF utility cost.  He spoke to the  $120 million in                                                                    
funding   provided  to   the   Alaska  Gasline   Development                                                                    
Corporation  (AGDC) and  the need  to  determine whether  an                                                                    
open  season  would be  successful.  He  did not  believe  a                                                                    
statewide  energy plan  that included  imported LNG  was the                                                                    
answer. He  urged the committee to  support the legislation.                                                                    
He  believed it  was  the only  option  available under  the                                                                    
Alaska  Gasline Inducement  Act (AGIA).  He opined  that the                                                                    
option gave the state leverage  in the promotion of AGIA. He                                                                    
believed the bill  was in the best interest  of Alaskans. He                                                                    
stressed that even  a failure would bring  more success than                                                                    
no action.                                                                                                                      
                                                                                                                                
1:50:20 PM                                                                                                                    
                                                                                                                                
RICK  ROGERS,   EXECUTIVE  DIRECTOR,   RESOURCE  DEVELOPMENT                                                                    
COUNCIL, ANCHORAGE  (via teleconference),  vocalized support                                                                    
for the bill.  He spoke to the  council's diverse membership                                                                    
and  noted the  importance that  the  bill did  not pit  one                                                                    
energy resource  against another.  The council  believed the                                                                    
best energy solutions for Alaskans  were the ones that would                                                                    
balance  low cost  with reliability  over the  long-term. He                                                                    
stated that the bill would  provide the resources to advance                                                                    
an  instate pipeline  to  an open  season.  The open  season                                                                    
would  enable  the  project to  compete  for  transportation                                                                    
commitments;  it  would  succeed  or fail  on  its  economic                                                                    
merits.  The  council was  hopeful  that  a larger  diameter                                                                    
pipeline to tidewater would be  sanctioned in the future. He                                                                    
stated that  HB 4 positioned  the gasline authority  to help                                                                    
expand  intrastate  gas  transportation  from  the  off-take                                                                    
points  required under  AGIA.  The council  did not  believe                                                                    
that a  standalone gasline project diminished  the prospects                                                                    
of  a   larger  capacity   line.  He  stated   that  private                                                                    
enterprise  and  the  marketplace  would  dictate  the  best                                                                    
gasline  option. The  council encouraged  the addition  of a                                                                    
sunset  provision to  the AGDC  enabling legislation  should                                                                    
the entity be rendered obsolete  in the future. He furthered                                                                    
that the viability  of the project would not  be known until                                                                    
an open season took place.  He stressed that the delivery of                                                                    
reliable and cost-effective energy  to Alaskans was critical                                                                    
to the future prosperity of its  people. He stated that HB 4                                                                    
was  an  appropriate means  to  advance  a pipeline  project                                                                    
forward.                                                                                                                        
                                                                                                                                
1:55:10 PM                                                                                                                    
                                                                                                                                
RON LONG,  ALASKA GASLINE DEVELOPMENT  CORPORATION COMMUNITY                                                                    
ADVISORY  COUNCIL,  SEWARD  (via teleconference),  spoke  in                                                                    
favor of  the legislation.  He urged  the committee  to keep                                                                    
the process  moving forward.  He supported  a large  line to                                                                    
Seward, but  believed a near-term solution  was necessary to                                                                    
address  the   problem.  He  did  not   believe  the  crisis                                                                    
confronting the  Railbelt utilities  had been  foreseen when                                                                    
the AGIA process  had begun in the past. He  noted that dire                                                                    
and drastic  options had been  discussed to  accommodate for                                                                    
the projected  revenue shortfall.  He spoke to  high heating                                                                    
costs. He  stated that the near-term  and long-term projects                                                                    
were not  exclusive. The project  under HB 4  had permitting                                                                    
and background work  that would enable a  project to proceed                                                                    
in the  near-term and included the  possibility of extending                                                                    
gas to  other areas of the  state in the future.  He did not                                                                    
believe  that  the  project  would  do  any  harm  to  other                                                                    
proposals.                                                                                                                      
                                                                                                                                
Co-Chair Stoltze  remarked that  he believed  Port MacKenzie                                                                    
was export port of the future.                                                                                                  
                                                                                                                                
1:58:36 PM                                                                                                                    
                                                                                                                                
BILL  SHEFFIELD,  FORMER  GOVERNOR OF  ALASKA,  JUNEAU  (via                                                                    
teleconference),  voiced  support  for the  legislation.  He                                                                    
stated that the  passage of HB 4 would be  an important step                                                                    
towards  delivering a  long-term  and  affordable source  of                                                                    
energy  to a  large portion  of the  state's population.  He                                                                    
elaborated  that  the  bill   would  provide  near-term  and                                                                    
ongoing  employment opportunities.  He added  that the  bill                                                                    
would allow  for the potential  reopening of  Kenai's Agrium                                                                    
plant.  He  stated  that  HB  4  could  help  the  Foothills                                                                    
refinery in Fairbanks to return  to full operation; it would                                                                    
also help Fairbanks to resolve  its air quality problems and                                                                    
reduce  monthly energy  costs.  He  discussed that  proposed                                                                    
mining operations  would benefit from affordable  energy and                                                                    
increased jobs would result. He  recalled that Foothills had                                                                    
shipped a  substantial amount to  the Anchorage port  on the                                                                    
Alaska Railroad  in the  past; the company  had shut  down a                                                                    
large portion  of its  plant and  its shipment  had declined                                                                    
dramatically.  He pointed  to vehicle  gasoline coming  from                                                                    
the Lower 48.  He emphasized that the  creation of thousands                                                                    
of  jobs and  a reduced  cost  of living  for residents  was                                                                    
significant.  He  stated  that  the  instate  line  prospect                                                                    
headed up  by the Alaska Housing  Finance Corporation (AHFC)                                                                    
had  moved  "leaps  and bounds"  forward;  an  Environmental                                                                    
Impact Statement  (EIS) and most right-of-way  approvals had                                                                    
been secured. He stressed that  passing HB 4 was critical to                                                                    
moving the project forward to an open season.                                                                                   
                                                                                                                                
2:02:41 PM                                                                                                                    
                                                                                                                                
Former Governor  Sheffield stated that an  open season could                                                                    
be  concluded by  the  end  of 2014  and  the gasline  could                                                                    
subsequently be completed  in 2019. He believed  gas was for                                                                    
Alaskans to use  and was separate from the  oil revenues the                                                                    
state depended  on for public  services. He  elaborated that                                                                    
the project would allow the  state to support its own energy                                                                    
needs at  an affordable  cost for  generations to  come. His                                                                    
interest  in  the  project  related  to  the  well-being  of                                                                    
Alaskans  and  his  long-term residency  in  the  state.  He                                                                    
thanked the committee for its time.                                                                                             
                                                                                                                                
REPRESENTATIVE   MIKE   HAWKER,  SPONSOR,   thanked   former                                                                    
Governor Sheffield for supporting the legislation.                                                                              
                                                                                                                                
Representative  Gara  asked  if   the  former  governor  had                                                                    
testified that  the pipeline would  be directed  towards the                                                                    
Kenai  area to  help the  Conoco and  Agrium plants.  Former                                                                    
Governor Sheffield  replied that the gasline  was planned to                                                                    
travel through the Matanuska Valley  where gas was currently                                                                    
taken  and  trucked  to   Fairbanks.  There  were  pipelines                                                                    
underneath the  inlet towards Nikiski. He  answered that the                                                                    
pipeline would  connect up  to transport  gas to  Nikiski if                                                                    
the state wanted to sell excess gas to another location.                                                                        
                                                                                                                                
2:06:00 PM                                                                                                                    
                                                                                                                                
Co-Chair   Stoltze  thanked   Governor  Sheffield   for  his                                                                    
continued  interest   in  government   and  the   issue.  He                                                                    
acknowledged  the  former  governor's  success  in  bringing                                                                    
economic  development to  rural  Alaska. He  pointed to  the                                                                    
implementation  of the  Red  Dog Mine  and  the creation  of                                                                    
Alaska   Industrial   Development  and   Export   Authority,                                                                    
(AIDEA). He  noted that without  the former  governor's work                                                                    
some of  the current opportunities  for the state  would not                                                                    
exist.                                                                                                                          
                                                                                                                                
2:07:29 PM                                                                                                                    
                                                                                                                                
DAVID PRUHS,  SELF, FAIRBANKS (via  teleconference), thanked                                                                    
the sponsors  for introducing the  bill that he  hoped would                                                                    
provide  a   long-term  solution  to  reduce   energy  costs                                                                    
throughout  the  state. He  stated  that  the gasline  would                                                                    
benefit  approximately  75  percent  to 80  percent  of  the                                                                    
state. He pointed to high fuel  costs. He stressed that HB 4                                                                    
offered a  solution that  would fit  the needs  of residents                                                                    
and government.                                                                                                                 
                                                                                                                                
2:09:31 PM                                                                                                                    
                                                                                                                                
BOB SHEFCHIK,  CHAIR, CHAMBER  ENERGY COMMITTEE,  AND CHAIR,                                                                    
INTERIOR GAS UTILITY  BOARD, FAIRBANKS (via teleconference),                                                                    
testified in  support of the legislation.  He explained that                                                                    
the ASAP line and HB 9  had been priorities of the Fairbanks                                                                    
Chamber  Energy Committee  the prior  year; the  support was                                                                    
maintained for HB 4. He remarked  that piped gas was seen by                                                                    
most as the best form of  transport from the North Slope. He                                                                    
stated  that piping  gas  would require  more  demand and  a                                                                    
longer-time  frame than  a  proposed  gas trucking  project;                                                                    
however,  he  believed  piped  gas  remained  the  long-term                                                                    
solution to provide  access to Alaskans. He  stated that the                                                                    
bill created  the entity and provided  the underpinnings for                                                                    
an instate  line from  the North Slope.  He opined  that the                                                                    
economic  viability would  be proven  in the  development of                                                                    
the  project.  He  spoke  in support  of  building  on  work                                                                    
conducted by AGDC. He shared  that the bill was supported by                                                                    
the chamber and  the utility board. He  stated that although                                                                    
the  community's  focus  had been  on  addressing  immediate                                                                    
solutions, the work towards  developing a long-term solution                                                                    
was valued.                                                                                                                     
                                                                                                                                
2:11:29 PM                                                                                                                    
                                                                                                                                
JIM  PLAQUET, ALASKA  SUPPORT  INDUSTRY ALLIANCE,  FAIRBANKS                                                                    
(via  teleconference),  spoke  in  favor  of  the  bill.  He                                                                    
stressed  that  the  bill  would   provide  the  most  cost-                                                                    
effective  and  time  sensitive schedule  for  developing  a                                                                    
long-term, affordable energy solution  for Fairbanks and the                                                                    
state. He stated  that the bill would allow AGDC  to work to                                                                    
provide Alaskans  with energy needed  for space  heating and                                                                    
economic survival. He discussed  that the bill directed AGDC                                                                    
to develop a  pipeline at the lowest cost  without delay. He                                                                    
discussed  items allowed  under the  legislation. He  stated                                                                    
that the  legislation called on state  and local governments                                                                    
to participate  in lowering costs for  Alaskans. He stressed                                                                    
that  high  energy costs  were  crippling  the Interior  and                                                                    
rural Alaska. He emphasized that  the bill would provide low                                                                    
cost energy for Alaskans in the long-term.                                                                                      
                                                                                                                                
2:13:48 PM                                                                                                                    
                                                                                                                                
JOMO  STEWART, FAIRBANKS  ECONOMIC DEVELOPMENT  CORPORATION,                                                                    
FAIRBANKS (via  teleconference), testified in support  of HB                                                                    
4. He discussed  that energy was a  fundamental component of                                                                    
any modern  economy. He stressed  that the  availability and                                                                    
affordability  of energy  was critical.  He  stated that  in                                                                    
general the  corporation was supportive of  any project that                                                                    
linked Alaska's  two oil and  gas producing regions  to make                                                                    
energy  more available  and accessible  to  Alaskans in  the                                                                    
near-term  and  in  the future.  The  corporation  was  also                                                                    
generally supportive  of the advancement of  mechanisms that                                                                    
allow   Alaska  to   more   actively   participate  in   the                                                                    
development  of   its  resources.   He  believed   the  bill                                                                    
supported the corporation's goals.                                                                                              
                                                                                                                                
Co-Chair  Stoltze  noted   that  Representative  Wilson  had                                                                    
joined the meeting.                                                                                                             
                                                                                                                                
2:15:41 PM                                                                                                                    
                                                                                                                                
MERRICK PEIRCE, SELF,  FAIRBANKS (via teleconference), spoke                                                                    
in opposition to  the bill [back up  documents were provided                                                                    
to  the  committee  (copy  on  file)].  He  discussed  Asian                                                                    
interest in  gas and  that the state's  partner in  AGIA had                                                                    
been nonresponsive. He stated that  the concept of a bullet-                                                                    
line  had been  rejected by  voters in  a 2002  election. He                                                                    
believed that the bullet-line  project under the legislation                                                                    
did  not have  economy  of  scale. He  noted  that debt  and                                                                    
equity returns were enormous. He  detailed that a 75 percent                                                                    
to  25  percent  debt-to-equity ratio  would  mean  combined                                                                    
service  costs of  $500 million  to $600  million per  year,                                                                    
which was approximately $1,400 per user per year.                                                                               
                                                                                                                                
Mr.  Peirce mentioned  items related  to gaining  buyers for                                                                    
expensive  bullet-line gas  including  the  large supply  of                                                                    
shale gas  in the Lower  48. He  wondered why a  buyer would                                                                    
pay two  to three times the  Henry Hub price for  gas from a                                                                    
bullet-line.  He  stated that  a  gasline  through the  Cook                                                                    
Inlet basin  would be more  cost effective.  He acknowledged                                                                    
AGDC technical staff for providing  new tools for the state.                                                                    
He  pointed to  a  publicly owned  right-of-way between  Big                                                                    
Lake  and  Fairbanks.  He   mentioned  new  spool-able  high                                                                    
pressure  pipe  that offered  a  cheaper  option than  steel                                                                    
pipe; it was  possible to run an 8  inch flex-steel pipeline                                                                    
from Big  Lake to  Fairbanks for  a much  lower cost  in the                                                                    
upcoming year. He provided  additional information about the                                                                    
benefits  of  the  flex-steel  pipe;   costs  were  low  and                                                                    
installation was  simple. He  detailed that  an 8  inch pipe                                                                    
could deliver between  8.4 billion to 11  billion cubic feet                                                                    
of gas  per year  depending upon  the number  of compressors                                                                    
used. He suggested  giving the project to  AGDC. He believed                                                                    
the concept of  using a small pipeline  integrated well with                                                                    
Cook  Inlet  development;  developers  would  like  to  have                                                                    
Fairbanks as a  market for gas. He discussed  other ways the                                                                    
flex-steel pipeline  would integrate well. He  would provide                                                                    
the information in writing.                                                                                                     
                                                                                                                                
Co-Chair Stoltze asked Mr. Pierce  to follow up with written                                                                    
documents.                                                                                                                      
                                                                                                                                
2:22:07 PM                                                                                                                    
                                                                                                                                
DEANTHA   CROCKETT,  EXECUTIVE   DIRECTOR,  ALASKA   MINER'S                                                                    
ASSOCIATION,  ANCHORAGE   (via  teleconference),   spoke  in                                                                    
strong support  of the legislation.  She discussed  that the                                                                    
legislation and  its pursuit of large  energy projects would                                                                    
work  to  relieve Alaskan  residents  from  the dire  energy                                                                    
situation.  She  communicated  that large  mines  in  Alaska                                                                    
struggled with  power at a substantial  level; therefore the                                                                    
association  was very  supportive  of the  bill. She  shared                                                                    
that  mining   companies  faced  a   perpetual  cost-benefit                                                                    
analysis due to the high  expense of operating in the state.                                                                    
She  furthered that  mining in  Alaska had  great prospects,                                                                    
but  the   lack  of  infrastructure   was  a   deterrent  to                                                                    
companies.  She stressed  that  energy  solutions were  very                                                                    
beneficial  to the  industry. She  relayed  that the  mining                                                                    
industry  would provide  demand for  the project.  She noted                                                                    
that  the  industry was  pursing  gas  pipelines that  would                                                                    
connect directly  with mining projects. She  stated that the                                                                    
project would  also allow  Alaska to  viably market  its gas                                                                    
commercially in  other outside locations.  She added  that a                                                                    
letter of support had been  submitted to the committee (copy                                                                    
on file).                                                                                                                       
                                                                                                                                
2:25:03 PM                                                                                                                    
                                                                                                                                
ALAN  LEMASTER,   DIRECTOR,  ALASKA  NATURAL   GAS  PIPELINE                                                                    
COALITION,  COPPER  VALLEY  (via teleconference),  spoke  in                                                                    
opposition  to  the  bill.   He  discussed  the  coalition's                                                                    
membership that  was in support  of a gas pipeline  from the                                                                    
North Slope to  Prince William Sound. He noted  that some of                                                                    
the member  organizations included the Fairbanks  North Star                                                                    
Borough,  the  City of  Fairbanks,  Delta,  North Pole,  the                                                                    
Copper Valley Chamber  of Commerce, the City  of Valdez, and                                                                    
other. He stated coalition's concern  was that HB 4 appeared                                                                    
to be targeted at placing  natural gas in the Anchorage bowl                                                                    
and surrounding areas  in a way that would  not benefit many                                                                    
residents  along  the  Trans-Alaska Pipeline  System  (TAPS)                                                                    
corridor.                                                                                                                       
                                                                                                                                
Mr. LeMaster stressed the importance  of adopting a solution                                                                    
that would benefit all Alaskans.  He had recently attended a                                                                    
House  Resources  Committee   meeting  where  producers  had                                                                    
presented  findings. Producers  had spoken  about conditions                                                                    
that would  determine the feasibility of  building a gasline                                                                    
in Alaska; producers specified that  a pipeline must be high                                                                    
pressure, a minimum  of 42 inches, run from  the North Slope                                                                    
to tidewater, and  able to carry sufficient  natural gas for                                                                    
liquefaction and sale  to Pacific Rim countries  from a deep                                                                    
water port. He  stated that all of the issues  raised by the                                                                    
producers seemed to  support an option that  would run along                                                                    
the TAPS  corridor as  presented by  the Alaska  Natural Gas                                                                    
Development  Authority (ANGDA)  and  supported  by AGIA.  He                                                                    
observed  that the  line proposed  under HB  4 would  be low                                                                    
volume,  low   pressure,  carry  dry  gas   with  no  export                                                                    
component,   and  would   be  available   only  to   certain                                                                    
communities.                                                                                                                    
                                                                                                                                
Mr. LeMaster remarked that natural  gas liquids would remain                                                                    
on the North Slope and  would not be available. He mentioned                                                                    
recent open  seasons that had  occurred under AGIA  in 2012;                                                                    
the results  remained confidential.  He expounded that  HB 4                                                                    
took  the state  to another  open season,  which could  take                                                                    
more  than   two  years  and  provided   no  guarantee  that                                                                    
producers would agree  to send product through  the line. He                                                                    
stressed that  the ASAP line  would not carry LNG  and would                                                                    
not  provide  needed  revenue  from the  export  of  gas  to                                                                    
Pacific Rim  countries. He  stated that  the line  would not                                                                    
lower energy costs for  Southcentral Alaska. He communicated                                                                    
that  the  line  would  be sold  to  private  companies  for                                                                    
operation  and  costs  would  likely  increase  with  little                                                                    
control  from state  or regulatory  agencies. The  coalition                                                                    
believed it was  a dangerous prospect. He  stated that there                                                                    
was  a viable  project under  AGIA for  which the  state had                                                                    
already paid  $300 million. He  noted that  significant work                                                                    
had been done  by ANGDA over the past 10  years, costing the                                                                    
state over  $11 million as a  result of a public  vote for a                                                                    
line to Valdez.  He wondered why $400 million  more would be                                                                    
spent  on   something  that  had   already  been   done.  He                                                                    
emphasized  that  a large  volume  line  would lower  energy                                                                    
costs and would provide revenue  to the state from an export                                                                    
component. He reiterated  support for a line  along the TAPS                                                                    
Richardson Highway to Valdez.                                                                                                   
                                                                                                                                
2:31:20 PM                                                                                                                    
                                                                                                                                
Mr. LeMaster communicated  the coalition's recommendation to                                                                    
use  the  $400  million  remaining under  AGIA  for  an  LNG                                                                    
trucking  project for  Fairbanks,  to  retrofit the  Nikiski                                                                    
plant for regasification  from Cook Inlet, and  to approve a                                                                    
large volume  gasline to tidewater.  He urged  the committee                                                                    
to vote against the bill.                                                                                                       
                                                                                                                                
Representative Wilson asked if  Mr. LeMaster was speaking on                                                                    
behalf  of the  Fairbanks North  Star Borough.  Mr. LeMaster                                                                    
replied that  he was  speaking on  behalf of  the coalition;                                                                    
the borough  was a member  of the  coalition. Representative                                                                    
Wilson  asked  for  verification   that  the  coalition  was                                                                    
speaking  on behalf  of the  borough. She  relayed that  the                                                                    
borough had testified  in support of the  bill. Mr. LeMaster                                                                    
answered that  the coalition had  presented its  position on                                                                    
the proposal the  prior year to the borough and  the City of                                                                    
Fairbanks;   subsequently  the   borough   had  provided   a                                                                    
resolution to  the coalition in  support of  the coalition's                                                                    
position. He noted that the  resolution had been provided to                                                                    
the House Resources Committee.                                                                                                  
                                                                                                                                
Representative Wilson  requested that the  coalition provide                                                                    
a copy of the borough  resolution specifically in opposition                                                                    
to HB 4.                                                                                                                        
                                                                                                                                
Co-Chair Stoltze  requested that the information  be sent to                                                                    
his office for distribution.                                                                                                    
                                                                                                                                
2:33:59 PM                                                                                                                    
                                                                                                                                
Representative  Thompson  pointed  to resolutions  from  the                                                                    
Cities of  North Pole and  Fairbanks expressing  support for                                                                    
HB 4.                                                                                                                           
                                                                                                                                
Mr.   LeMaster  understood   that   Fairbanks  had   serious                                                                    
difficulty with the  cost of energy. He stated  that in past                                                                    
discussions  Fairbanks had  been paying  $0.21 per  kilowatt                                                                    
hour  for electricity;  Copper Valley  was  paying $0.35  to                                                                    
$0.36 per  kilowatt hour  and the  price had  recently risen                                                                    
exponentially. He  stated that  businesses in the  area were                                                                    
considering  closing due  to high  costs, which  would cause                                                                    
the diminishing  population to decline further.  He believed                                                                    
the  same was  true for  Valdez, Delta,  Tok, and  other. He                                                                    
stated that low-cost  energy was critical if  the region was                                                                    
going  to survive  as a  viable community  for commerce.  He                                                                    
stated that he  would fully support HB 4 if  it would reduce                                                                    
energy costs for eastern Alaska.                                                                                                
                                                                                                                                
Co-Chair Stoltze  noted that the  copies of  the resolutions                                                                    
would be reviewed.                                                                                                              
                                                                                                                                
2:36:52 PM                                                                                                                    
                                                                                                                                
JASON  HOKE,  REGIONAL   ARDOR,  COPPER  VALLEY  DEVELOPMENT                                                                    
ASSOCIATION,  COPPER VALLEY  (via teleconference),  spoke in                                                                    
support of  the bill. He  believed the state needed  to move                                                                    
forward. He  opined that HB  4 would provide a  solution for                                                                    
some of  the energy issues  facing Alaskans. He  agreed that                                                                    
another  pipeline  would  be  nice,  but  the  research  and                                                                    
numbers did  not indicate  the viability  of the  option. He                                                                    
believed the  bill provided for networking  with other small                                                                    
gas lines  in the  future. He  reiterated the  importance of                                                                    
moving  forward. He  urged the  committee's support  for the                                                                    
bill.                                                                                                                           
                                                                                                                                
2:38:41 PM                                                                                                                    
                                                                                                                                
KEN  HALL,  SELF,  FAIRBANKS  (via  teleconference),  voiced                                                                    
support for  the bill. He  stressed that the status  quo was                                                                    
not serving Alaska well. He  believed an instate gasline was                                                                    
a   tremendous  benefit   for   Interior  and   Southcentral                                                                    
residents  and  for  Alaska in  general.  He  mentioned  the                                                                    
trucking of LNG as a  short-term option for high cost energy                                                                    
relief. He discussed that a  large diameter gasline would be                                                                    
an  expensive and  significant undertaking.  He pointed  out                                                                    
the benefits of gas in  Fairbanks including relief of health                                                                    
issues related  to coal and  wood smoke. He opined  that the                                                                    
bill would provide opportunity for the state.                                                                                   
                                                                                                                                
2:41:13 PM                                                                                                                    
                                                                                                                                
TODD   WEGNER,   ASSISTANT   CITY   MANAGER,   VALDEZ   (via                                                                    
teleconference), urged the committee to  vote no on HB 4. He                                                                    
stated that  the ASAP  line would  not solve  the short-term                                                                    
energy crisis  in the  Interior or Cook  Inlet and  it would                                                                    
not solve the ongoing energy  crisis facing rural Alaska. He                                                                    
believed the project would not  answer the state's long-term                                                                    
energy and  fiscal needs.  He remarked  that the  bill would                                                                    
spend  $400  million  for  another  open  season;  two  open                                                                    
seasons had been held previously  under the AGIA process. He                                                                    
elaborated that during  one of the prior  open seasons Asian                                                                    
buyers  had expressed  interest to  ship and  purchase twice                                                                    
the amount of  gas for a viable project. He  opined that the                                                                    
only  project addressing  the  long-term  energy and  fiscal                                                                    
needs of  the state was  a maximum volume line  to tidewater                                                                    
with an  export component. He  detailed that a  large volume                                                                    
line would provide lower cost  energy to all Alaskans due to                                                                    
economy of scale. He stated  that interim solutions for Cook                                                                    
Inlet and the Interior would  be necessary under any gasline                                                                    
scenario. He asked  the committee to spend  the $400 million                                                                    
on  a  LNG  trucking  project   for  the  Interior  and  the                                                                    
renovation of the Nikiski plant  in Cook Inlet. He asked the                                                                    
committee to focus on a  project that would benefit Alaskans                                                                    
for many generations.                                                                                                           
                                                                                                                                
Co-Chair Stoltze stated  that the City of  Valdez would have                                                                    
the  ability  to  provide  further  comment  during  invited                                                                    
testimony at a later date.                                                                                                      
                                                                                                                                
2:43:51 PM                                                                                                                    
                                                                                                                                
JOHN BITNEY, STATE GOVERNMENT  LIAISON, NORTH SLOPE BOROUGH,                                                                    
spoke in support of the  legislation. He referenced a letter                                                                    
of support written  by the North Slope  Borough mayor, dated                                                                    
February  28, 2013  (copy  on file).  He  detailed that  the                                                                    
letter   addressed  developing   the  state's   natural  gas                                                                    
resources in  order to lower  energy costs for  Alaskans. He                                                                    
relayed  the borough's  excitement  related  to North  Slope                                                                    
development. The  letter spoke to the  importance of working                                                                    
together for  a long-term solution.  He added that  a letter                                                                    
had  been written  in support  of  legislation proposing  an                                                                    
[LNG] trucking project as well.                                                                                                 
                                                                                                                                
2:45:43 PM                                                                                                                    
                                                                                                                                
Representative Wilson asked why  the North Slope Borough had                                                                    
withdrawn support  for an  alternative port  authority plan.                                                                    
Mr. Bitney  was unsure  of the reason,  but would  follow up                                                                    
with the information.                                                                                                           
                                                                                                                                
2:47:29 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:48:38 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
TOM MALONEY, SELF, ANCHORAGE (via teleconference), read                                                                         
testimony for his son Sam Maloney:                                                                                              
                                                                                                                                
     I  fully   support  House  Bill   4,  which   has  been                                                                    
     introduced  by  my  representative  Mr.  Hawker.  As  a                                                                    
     lifelong  Alaskan I  have enjoyed  a fine  education at                                                                    
     South High, King Career Center,  and I'll graduate from                                                                    
     UAA  in  May   with  a  degree  in   welding  and  non-                                                                    
     destructive technology.  We need new energy  for Alaska                                                                    
     to lower heating costs particularly  in the Interior of                                                                    
     Alaska,   but  also   in   other  locations   including                                                                    
     Anchorage where I reside. We  also need to provide high                                                                    
     pay job opportunities to folks  like myself who like to                                                                    
     learn and even more so,  love to earn. Let's get energy                                                                    
    for Alaska and get Alaska moving again. Thank you.                                                                          
                                                                                                                                
Co-Chair Stoltze CLOSED public testimony. He discussed that                                                                     
there would be invited testimony at a subsequent meeting.                                                                       
He spoke to the schedule for the following day.                                                                                 
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
2:53:27 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 2:53 p.m.                                                                                          

Document Name Date/Time Subjects
HB4 Support-Kenai Pen Borough.pdf HFIN 3/26/2013 1:30:00 PM
HB 4
HB 4 AKHLA Support.pdf HFIN 3/26/2013 1:30:00 PM
HB 4
HB 4 Valdez Resolution Opposition.pdf HFIN 3/26/2013 1:30:00 PM
HB 4