Legislature(2015 - 2016)BARNES 124

02/06/2015 01:00 PM House RESOURCES



Audio Topic
01:00:24 PM Start
01:01:19 PM Update: Alaska Gasline Development Corporation
02:39:56 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Update: TELECONFERENCED
Alaska Gasline Development Corporation
-- Testimony <Invitation Only> --
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                        February 6, 2015                                                                                        
                           1:00 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Benjamin Nageak, Co-Chair                                                                                        
Representative David Talerico, Co-Chair                                                                                         
Representative Mike Hawker, Vice Chair                                                                                          
Representative Bob Herron                                                                                                       
Representative Craig Johnson                                                                                                    
Representative Kurt Olson                                                                                                       
Representative Paul Seaton                                                                                                      
Representative Andy Josephson                                                                                                   
Representative Geran Tarr                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
UPDATE:  ALASKA GASLINE DEVELOPMENT CORPORATION                                                                                 
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
BRUCE TANGEMAN, Vice President                                                                                                  
Finance and Administration                                                                                                      
Alaska Gasline Development Corporation (AGDC)                                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Assisted in providing a PowerPoint update                                                                
regarding the Alaska Gasline Development Corporation.                                                                           
                                                                                                                                
DAN FAUSKE, President                                                                                                           
Alaska Gasline Development Corporation (AGDC)                                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Assisted in providing a PowerPoint update                                                                
regarding the Alaska Gasline Development Corporation.                                                                           
                                                                                                                                
FRANK RICHARDS, P.E., Vice President                                                                                            
Engineering and Program Management                                                                                              
Alaska Gasline Development Corporation (AGDC)                                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Assisted in  providing a  PowerPoint update                                                             
regarding the Alaska Gasline Development Corporation.                                                                           
                                                                                                                                
JOE DUBLER, Vice President                                                                                                      
Commercial Operations                                                                                                           
Alaska Gasline Development Corporation (AGDC)                                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Assisted in  providing a  PowerPoint update                                                             
regarding the Alaska Gasline Development Corporation.                                                                           
                                                                                                                                
FRITZ KRUSEN, Vice President                                                                                                    
Alaska LNG                                                                                                                      
Alaska Gasline Development Corporation (AGDC)                                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Assisted in  providing a  PowerPoint update                                                             
regarding the Alaska Gasline Development Corporation.                                                                           
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:00:24 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  BENJAMIN NAGEAK  called  the  House Resources  Standing                                                             
Committee meeting to order at  1:00 p.m.  Representatives Seaton,                                                               
Olson,  Josephson,  Herron,  Hawker, Talerico,  and  Nageak  were                                                               
present at the  call to order.  Representatives  Johnson and Tarr                                                               
arrived as the meeting was in progress.                                                                                         
                                                                                                                                
^UPDATE:  Alaska Gasline Development Corporation                                                                                
        UPDATE:  Alaska Gasline Development Corporation                                                                     
                                                                                                                                
1:01:19 PM                                                                                                                    
                                                                                                                                
CO-CHAIR NAGEAK announced  that the only order of  business is an                                                               
update on the Alaska Gasline Development Corporation (AGDC).                                                                    
                                                                                                                                
1:03:07 PM                                                                                                                    
                                                                                                                                
BRUCE  TANGEMAN,  Vice  President,  Finance  and  Administration,                                                               
Alaska  Gasline Development  Corporation (AGDC),  highlighted the                                                               
topics  that he  and his  colleagues  will be  covering in  their                                                               
update [slide  2]:  introduction to  AGDC, corporate initiatives,                                                               
accumulated  corporate assets,  update  on  the Alaska  Liquefied                                                               
Natural Gas  (LNG) Project,  overview of  the Alaska  Stand Alone                                                               
Pipeline (ASAP)  Project, near-term corporate focus,  and project                                                               
funding status.                                                                                                                 
                                                                                                                                
1:04:24 PM                                                                                                                    
                                                                                                                                
DAN  FAUSKE,  Alaska   Gasline  Development  Corporation  (AGDC),                                                               
introduced the Alaska Gasline  Development Corporation (slide 3).                                                               
He said that under AS 31.25.010,  AGDC is a public corporation of                                                               
the  State  of  Alaska,  with  a  legal  existence  separate  and                                                               
independent  of  the  state.    The  corporation  is  to  do  the                                                               
following:    develop  natural   gas  pipelines,  an  Alaska  LNG                                                               
project, and  other natural gas transportation  projects in-state                                                               
for  the maximum  benefit of  Alaskans;  finance, construct,  and                                                               
potentially  operate   natural  gas  and  other   non-oil  energy                                                               
transportation systems; provide economic  benefits and revenue to                                                               
the state; assist  the Department of Natural  Resources (DNR) and                                                               
the Department  of Revenue (DOR)  in maximizing the value  of the                                                               
state's royalty and tax gas;  hold the state's equity interest in                                                               
the  liquefaction  component  of  the  Alaska  LNG  project;  and                                                               
advance an  in-state pipeline capable  of delivering  North Slope                                                               
natural  gas to  Fairbanks, Southcentral,  and other  communities                                                               
within the state at the lowest possible cost.                                                                                   
                                                                                                                                
MR. FAUSKE  explained that AGDC  represents the  state's interest                                                               
on the 25 percent share  in the liquefaction and/or the downsteam                                                               
[of the  Alaska LNG Project],  with the downstream  including the                                                               
proposed large LNG project at Nikiski.   The ASAP Project is also                                                               
under AGDC's jurisdiction.  Both  projects are being managed very                                                               
well,  with AGDC  coordinating with  the Alaska  LNG Project  and                                                               
making sure  that work is  not duplicated.   The size of  AGDC is                                                               
being kept  small so as not  to create a bureaucracy  that has to                                                               
be fed.   Expert consultants are  being used on a  project basis,                                                               
so  once that  project's work  is done  the consultant's  work is                                                               
done.   He said AGDC has  been working very well  with the Alaska                                                               
LNG Project.   Much work has  been done and AGDC  has developed a                                                               
huge  dollar amount  of assets  that are  being utilized  on both                                                               
projects, which  is one  of AGDC's goals.   Negotiations  are now                                                               
underway  by AGDC  as  to  those things  developed  under ASAP  -                                                               
engineering  data,  borehole  data,  a  variety  of  permits  and                                                               
rights-of-way,  and a  large variety  of other  things that  must                                                               
occur  on  either project  and  are  transferrable to  the  other                                                               
project, which is a great benefit to the state.                                                                                 
                                                                                                                                
1:07:35 PM                                                                                                                    
                                                                                                                                
MR. FAUSKE  added that when House  Bill 4 was passed  [in 2013 by                                                               
the 28th Alaska  State Legislature], a provision  was included to                                                               
ensure that  AGDC would  consider propane.   So, the  gas mixture                                                               
that AGDC  is currently dealing  with on the  ASAP side is  a 1.5                                                               
percent propane  component, which equates to  about 4,000 barrels                                                               
of propane  a day  under the  current volume floor.   An  idea is                                                               
being explored  of propane  going down  the Yukon  [River] and/or                                                               
the Richardson [Highway] to support communities.                                                                                
                                                                                                                                
MR. FAUSKE  outlined AGDC's objectives (slide  4):  commercialize                                                               
Alaska's North  Slope gas resource; secure  a stable, affordable,                                                               
long-term  energy supply  for Alaskans;  generate revenue,  jobs,                                                               
and economic growth, facilitate  further oil and gas development;                                                               
and maximize overall benefit to Alaskans.                                                                                       
                                                                                                                                
1:09:29 PM                                                                                                                    
                                                                                                                                
FRANK  RICHARDS, P.E.,  Vice President,  Engineering and  Program                                                               
Management,  Alaska   Gasline  Development   Corporation  (AGDC),                                                               
reviewed AGDC's  corporate initiatives  (slide 5).   He  said two                                                               
main initiatives consume  all of AGDC's efforts -  the Alaska LNG                                                               
Project  (AK LNG)  and  the Alaska  Stand  Alone Pipeline  (ASAP)                                                               
Project.  He said AGDC is a  sponsor in both projects, but a main                                                               
differentiation is that for the  ASAP Project AGDC represents 100                                                               
percent of  the ownership for the  State of Alaska, while  in the                                                               
Alaska  LNG  Project AGDC  represents  the  state in  25  percent                                                               
ownership of the liquefaction plant.   The Alaska LNG Project has                                                               
three main  focuses:  the  LNG plant,  the pipeline, and  the gas                                                               
treatment  facility.     The  state   is  being   represented  by                                                               
TransCanada in the [pipeline and gas treatment facility].                                                                       
                                                                                                                                
MR.  RICHARDS  explained that  the  ASAP  Project was  originally                                                               
presented to AGDC  to develop and push forward  for energy relief                                                               
for Alaskans.   At a  volume of 500 million  cubic feet a  day of                                                               
natural  gas, AGDC  was to  look to  meet the  in-state needs  of                                                               
Interior  Alaska and  communities along  the pipeline  route, and                                                               
then be  able to  provide a  long-term stable  supply of  gas for                                                               
Southcentral  Alaska.   The  Alaska  LNG  Project was  about  the                                                               
commercialization  of  those North  Slope  resources.   The  ASAP                                                               
Project  has just  now completed  the  front-end engineering  and                                                               
design (FEED).   The engineering  and environmental  process have                                                               
been advanced,  the cultural resources  have been looked  at, and                                                               
cost estimating has been done on  the major components to come up                                                               
with a  new Class 3 estimate.   A Class 3  estimate reflects that                                                               
the  engineering has  been advanced  to approximately  30 percent                                                               
with  a  finer definition  so  that  now right-of-way  bid  level                                                               
estimates are coming  in from major contractors  within the state                                                               
and vendor  quotes are coming  in from process  manufacturers and                                                               
from fabrication yards in Asia in  terms of what it would take to                                                               
build the modules necessary for  gas (indisc. - throat clearing).                                                               
The Alaska  LNG Project is  now in pre-front-end  engineering and                                                               
design (Pre-FEED).  Thus, there  is a differentiation between the                                                               
two projects in  the level of work  that has been done.   For the                                                               
State  of Alaska  the ASAP  Project has  essentially developed  a                                                               
tremendous  amount of  resource  to advance  a pipeline  project,                                                               
including the right-of-way.                                                                                                     
                                                                                                                                
1:12:31 PM                                                                                                                    
                                                                                                                                
MR. RICHARDS  noted that one  key differentiator between  the two                                                               
projects is the  volume throughput - ASAP  was originally limited                                                               
to 500  million cubic feet  a day,  while the Alaska  LNG Project                                                               
was designed with the premise of  3.3 billion cubic feet a day at                                                               
the gas treatment  plant in Prudhoe Bay.  With  passage of Senate                                                               
Bill 138 in 2014, the  legislature instituted the policy call for                                                               
AGDC  that the  Alaska  LNG  Project was  a  primary project  and                                                               
therefore the work efforts undertaken  by the ASAP Project needed                                                               
to look  to align a  schedule with the  Alaska LNG Project.   So,                                                               
[the ASAP Project]  completion date has been delayed  to align to                                                               
the Alaska LNG  Project schedule.  The Alaska LNG  Project is now                                                               
moving  through  the  Pre-FEED process  and  a  determination  on                                                               
whether to  enter into FEED will  be made in first  quarter 2016.                                                               
This  doesn't mean  AGDC  is  stopping work,  but  rather is  now                                                               
focusing on  work that will  be durable for any  pipeline project                                                               
and that will  be an asset to either project  to move it forward.                                                               
The Class  3 estimate for the  total installed cost of  [the ASAP                                                               
Project] is approximately $10 billion,  plus or minus 20 percent.                                                               
Over the last  few years the estimate level  was at approximately                                                               
$7.7 billion, plus or minus 30  percent.  With advancement of the                                                               
engineering  and the  refinement of  the process,  AGDC has  been                                                               
able to bring that cost estimate  into a finer definition and now                                                               
has good confidence on that number.   The $10 billion for ASAP is                                                               
as opposed to $45-$65 billion for the Alaska LNG Project.                                                                       
                                                                                                                                
1:15:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  inquired whether, as 100  percent owner of                                                               
ASAP, the  state is paying  100 percent  of the cost  for further                                                               
engineering and other work.   He further inquired whether that is                                                               
freely available to the Alaska  LNG Project and whether the state                                                               
is  being reimbursed  from the  other  owners of  the Alaska  LNG                                                               
Project for any of the ASAP work that is shared.                                                                                
                                                                                                                                
MR. RICHARDS replied that AGDC  will talk about its spending plan                                                               
on slide  15, but  the simple  answer is  that the  work products                                                               
completed to date have been  at 100 percent of ASAP expenditures.                                                               
Proceeding forward,  AGDC has signed cooperation  agreements with                                                               
the Alaska LNG Project and there are joint work programs.                                                                       
                                                                                                                                
1:16:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TARR  inquired whether  pipe or steel  has already                                                               
been purchased for the ASAP Project.                                                                                            
                                                                                                                                
MR. RICHARDS  responded by drawing  attention to  the accumulated                                                               
assets for  the ASAP Project listed  on slide [7].   He explained                                                               
that  the   U.S.  Department   of  Transportation   Pipeline  and                                                               
Hazardous  Materials Safety  Administration (PHMSA)  is concerned                                                               
that  any  pipeline  that  crosses  discontinuous  permafrost  is                                                               
strong enough to  handle the frost heave and  thaw settlement and                                                               
the strain  accumulation that results from  that ground movement.                                                               
So, AGDC  procured specialized  pipe for  testing to  verify that                                                               
AGDC's design parameters could be  met by the mills producing the                                                               
pipe.  Only three mills  could produce the specialized metallurgy                                                               
necessary  to  meet  the  strength   demands  for  this  pipe  in                                                               
discontinuous permafrost - one in  Germany, one in Japan, and one                                                               
in India.  There  are no mills in the U.S.  or North America that                                                               
are able  to produce  the quality  of steel  plate to  meet those                                                               
specified  metallurgy requirements.   Twelve  pipe segments  were                                                               
purchased  from  each mill  for  a  total of  thirty-six  40-foot                                                               
lengths of pipe.  These samples  were brought to the U.S. and are                                                               
being welded together,  cut apart, and broken to  verify that the                                                               
materials meet the design quality  specifications - and they are.                                                               
The small-scale  testing was just  completed and testing  has now                                                               
advanced  into the  medium scale,  or crude  wide plate,  testing                                                               
where  pieces  are  welded  together and  then  pulled  apart  in                                                               
different axial directions to determine  whether the pipe will be                                                               
able  to   handle  the   anticipated  strains   in  discontinuous                                                               
permafrost zones.                                                                                                               
                                                                                                                                
MR. FAUSKE added  that if the ASAP Project is  moved forward, the                                                               
vast majority  of the pipe would  be under the current  design of                                                               
36-inch X70 pipe,  which is available in the U.S.   The desire is                                                               
that it  would be manufactured,  produced, and purchased  [in the                                                               
U.S.]    He clarified  that  Mr.  Richards  was talking  about  a                                                               
distance  of  about 100  miles  that  must meet  these  stringent                                                               
requirements for pipe under PHMSA.                                                                                              
                                                                                                                                
1:20:13 PM                                                                                                                    
                                                                                                                                
MR. RICHARDS reviewed the accumulated  corporate assets (slide 6)                                                               
that AGDC has  developed and is holding for the  State of Alaska.                                                               
With  the   passage  of  House   Bill  369  [26th   Alaska  State                                                               
Legislature] and  House Bill 4  [28th Alaska  State Legislature],                                                               
the legislature  directed DNR to  grant AGDC  state right-of-way.                                                               
An  unconditional and  transferable right-of-way,  it is  a major                                                               
asset that  is being  held by AGDC  for the state  to be  able to                                                               
advance  a  pipeline  project.    A  final  environmental  impact                                                               
statement (FEIS) was  completed by AGDC [in October  2012].  This                                                               
process is  required under the National  Environmental Policy Act                                                               
(NEPA)  of 1969  for assessing  impacts to  wetlands, flora,  and                                                               
fauna.  A supplemental environmental  impact statement (SEIS) was                                                               
initiated [in August  2014].  The SEIS is due  to a design change                                                               
from  the  original premise  of  a  24-inch, high-pressure,  2500                                                               
pounds  per square  inch (PSI)  pipeline to  a 36-inch  diameter,                                                               
1480  PSI pipeline.   This  new design  is a  more cost-effective                                                               
pipeline size  to meet the  legislative intent of lowest  cost to                                                               
Alaskans.   Under the SEIS,  AGDC has:   prepared and  produced a                                                               
new plan  of development (POD),  which is a requirement  of state                                                               
and  federal  agencies;   written  the  environmental  evaluation                                                               
document (EED),  which is essentially  the draft of the  EIS; and                                                               
conducted  public scoping  meetings in  16 communities  along the                                                               
pipeline route as  well as off the pipeline route  to explain how                                                               
the project  has changed and  how communities would  be impacted.                                                               
The  outcome of  those meetings  was  very positive.   There  was                                                               
great local support  from the public as well  as federal agencies                                                               
that saw the benefit of  potentially having natural gas available                                                               
to them, such as the Denali National Park and Preserve.                                                                         
                                                                                                                                
MR. FAUSKE added  that AGDC also received praise  from the Alaska                                                               
LNG Project on  the [project execution plan (PEP)].   He reported                                                               
that the  Alaska LNG Project has  said the [PEP] would  also work                                                               
for the  LNG project from  an engineering perspective and  a plan                                                               
going forward  as to how  to construct that mega-project.   Thus,                                                               
AGDC believes  the state  owns an  asset that  will serve  a dual                                                               
function in the very near future.                                                                                               
                                                                                                                                
1:23:21 PM                                                                                                                    
                                                                                                                                
MR. RICHARDS continued  his review of AGDC's  assets, noting that                                                               
AGDC has  had people in the  field walking the route,  looking at                                                               
the cultural  resources, fisheries,  wetlands impact,  and impact                                                               
to wildlife.   Thus, AGDC now has stream and  river crossings and                                                               
designs along  its pipeline.  Two-dimensional  (2-D) terrain unit                                                               
models have  been developed,  which are  very good  indicators of                                                               
the ground  conditions.   Since completing  wetlands delineation,                                                               
AGDC has  received a jurisdictional  determination from  the U.S.                                                               
Army Corps  of Engineers in  regard to those wetlands  along that                                                               
route.  Moving to slide 7,  he stated that AGDC has drilled [over                                                               
400]  geotechnical   boreholes  along   the  centerline   of  the                                                               
pipeline.    Also,  AGDC  is looking  for  new  material  sources                                                               
because a  challenge is that  the material sources in  Alaska are                                                               
either played  out or  at their limits  and new  material sources                                                               
need to  be identified for  the pipeline  project as well  as for                                                               
the  Department  of  Transportation &  Public  Facilities,  other                                                               
resource  developers,  and/or  another  pipeline  project.    Air                                                               
quality sampling has been completed  along the North Slope at the                                                               
gas conditioning facility; this is  the exact location of the gas                                                               
treatment  plant  for  the  Alaska  LNG Project.    So,  AGDC  is                                                               
accumulating  assets and  data  along  the route  as  well as  at                                                               
specific locations that  have value and benefit to  AGDC and both                                                               
projects.  As mentioned earlier,  AGDC has purchased strain based                                                               
design (SBD)  pipe.  Specifications  for the line-pipe  are done;                                                               
line-pipe  is the  more  than 600  miles of  pipe  that will  not                                                               
require the  specialized metallurgy.  The  environmental work has                                                               
been completed with  a [final] biologic assessment  and a [final]                                                               
essential fish  habitat.  Along  with the Class 3  estimate, AGDC                                                               
completed  its project  execution  plan (PEP)  in December  2014,                                                               
which  is  a  very  detailed document  that  represents  how  the                                                               
project will  go through final  design, how the project  could be                                                               
constructed,  and ultimately  how the  project would  be operated                                                               
into the future.   Mr. Richards said the  aforementioned are just                                                               
a small  example of the assets  had by AGDC.   Detailed alignment                                                               
sheets  are  coming out  of  AGDC's  design,  as well  as  "march                                                               
charts", which  are the  process and  the movement  of materials,                                                               
goods, and  equipment on how to  construct this project.   A very                                                               
robust [geographical]  information system has been  completed, as                                                               
well as a  30-percent design, Class 3 estimate,  which gives AGDC                                                               
much more definition of the total cost to build this project.                                                                   
                                                                                                                                
1:26:47 PM                                                                                                                    
                                                                                                                                
MR.  RICHARDS outlined  the approximate  pipeline land  ownership                                                               
(slide 8),  pointing out  that most of  the right-of-way  for the                                                               
ASAP Project would be across government  land.  The 55 percent of                                                               
state land has  already been granted to AGDC.   The 30 percent of                                                               
federal  land will  be  an  outcome of  the  SEIS  when the  U.S.                                                               
Department  of Interior,  through the  Bureau of  Land Management                                                               
(BLM), would  grant AGDC  a federal right-of-way  as a  record of                                                               
decision  of  that  environmental  process.    When  that  effort                                                               
concludes, probably  the third  quarter of  2015, AGDC  will have                                                               
about  85  percent  of  the  right-of-way granted  to  it  for  a                                                               
pipeline  project.   Leases with  municipal, borough,  or private                                                               
parcels have  not yet been initiated  because AGDC is not  at the                                                               
point where it knows it has received project sanction.                                                                          
                                                                                                                                
1:27:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON  related that the chief  executive officers                                                               
of  Alaska Native  Claims Settlement  Act (ANCSA)  [corporations]                                                               
were recently  in Juneau.   He said  they expressed  concern that                                                               
right-of-way discussions with the  four Native corporations whose                                                               
land the right-of-way would go  through, was "just checking off a                                                               
box".   He requested AGDC  to explain its discussions  with these                                                               
four Native corporations in acquiring these leases.                                                                             
                                                                                                                                
MR.  RICHARDS  replied  that  AGDC  has  been  working  with  the                                                               
regional Native corporations to acquire  access rights to be able                                                               
to do some of the aforementioned  development work.  He said AGDC                                                               
was granted those  access rights and has paid  the necessary fees                                                               
to  be  able   to  do  the  development  work.     More  detailed                                                               
discussions have  been had  with one  of the  larger corporations                                                               
about specifically the 30-plus miles  of pipeline route that will                                                               
be crossing their land, and it is an ongoing discussion.                                                                        
                                                                                                                                
MR.  FAUSKE added  that some  of  the confusion  might come  from                                                               
differentiation between discussions that  are being held with the                                                               
ASAP parties versus  the Alaska LNG Project parties.   While AGDC                                                               
represents both,  it is not  the lead  on the Alaska  LNG Project                                                               
debates with the ANCSA chief executive  officers.  He said he has                                                               
met with all of the officers and  they know him and his team, and                                                               
so  he will  encourage  the Alaska  LNG Project  to  have a  more                                                               
thorough discussion.   He allowed he has heard  the same concerns                                                               
and assured the committee that AGDC  will work hard on this issue                                                               
with its partners on the Alaska LNG Project.                                                                                    
                                                                                                                                
1:30:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TARR  inquired whether  the public is  clear about                                                               
the difference between the ASAP  and Alaska LNG projects and that                                                               
they are  two separate  projects, given  that 16  public hearings                                                               
have been  held for the ASAP  Project and more than  30 have been                                                               
held for the Alaska LNG Project.                                                                                                
                                                                                                                                
MR. FAUSKE said Representative Tarr  is raising a very good point                                                               
and AGDC is  dealing with the issue of messaging.   There is some                                                               
confusion and  AGDC will do its  level best to improve  in making                                                               
that message  clearer.  One way  AGDC has explained it  to people                                                               
is that  it is working  on two projects  with the idea  that they                                                               
will be  aligned, hopefully, and  that the larger project,  if it                                                               
shows continued  success and development,  would be the  one that                                                               
would  go forward.   He  said AGDC  has been  in every  community                                                               
numerous  times for  both the  ASAP  Project and  the Alaska  LNG                                                               
Project  and  it is  something  that  AGDC  needs to  keep  doing                                                               
because it  is so important and  it is AGDC's job  to ensure that                                                               
the message is clear and people are not confused.                                                                               
                                                                                                                                
1:32:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON, referring  to slide  8, asked  whether                                                               
the  29.7  percent  of  federal  land  is  mostly  BLM  with  the                                                               
exception of Denali National Park and Preserve.                                                                                 
                                                                                                                                
MR.  RICHARDS responded  that the  federal lands  are essentially                                                               
those  administered by  the Department  of Interior  through BLM.                                                               
The  route  of the  ASAP  Project,  as  well  as the  Alaska  LNG                                                               
Project, are outside of Denali National Park and Preserve.                                                                      
                                                                                                                                
1:32:46 PM                                                                                                                    
                                                                                                                                
MR. TANGEMAN requested Mr. Richards  to explain how the alignment                                                               
has  come  together, such  that  there  is one  right-of-way  for                                                               
whichever pipeline is eventually built.                                                                                         
                                                                                                                                
MR. RICHARDS  explained that through cooperation  between the two                                                               
projects,  and  because  both projects  led  from  essentially  a                                                               
common point  in Prudhoe  Bay down  to Southcentral  Alaska, AGDC                                                               
saw  that the  centerlines  of the  individual pipeline  projects                                                               
were in many  instances right on top of each  other.  However, in                                                               
some  instances,  because  of   geologic  conditions  and/or  the                                                               
crossing  of  the  Trans-Alaska Pipeline  System  (TAPS)  or  the                                                               
highway systems,  the centerlines were slightly  different.  Over                                                               
the last three months AGDC  has worked with the construction, the                                                               
right-of-way, and the  lands teams of both projects to  land on a                                                               
common centerline  for the  projects.  This  means that  the work                                                               
developed and conducted on the ASAP  Project in the past, and the                                                               
future  work plans  that  AGDC  will be  doing  jointly with  the                                                               
Alaska  LNG  Project, will  be  available  and valuable  to  both                                                               
projects.    This  major  milestone  allows  AGDC  to  work  more                                                               
cooperatively and collaboratively between the two projects.                                                                     
                                                                                                                                
1:34:28 PM                                                                                                                    
                                                                                                                                
JOE  DUBLER,   Vice  President,  Commercial   Operations,  Alaska                                                               
Gasline  Development Corporation  (AGDC), drew  attention to  the                                                               
graphic representation on slide 9  of the ownership of the Alaska                                                               
LNG Project.  The state owns  100 percent of the ASAP Project and                                                               
all  the assets  that it  has acquired,  he noted,  while in  the                                                               
Alaska  LNG Project  the  state  owns 25  percent  of the  entire                                                               
project.  That 25 percent  ownership interest would be the result                                                               
of the state taking royalty in-kind  and tax as gas, although the                                                               
decision  on whether  to do  that  has not  yet been  made.   The                                                               
state's  interest  is  divided between  TransCanada  [and  AGDC].                                                               
TransCanada will represent the state  in the gas treatment plant,                                                               
the gathering lines  from Prudhoe Bay and Point  Thomson, and the                                                               
main pipeline to  Nikiski, while AGDC will  represent the state's                                                               
interest in the LNG facility to be built at Nikiski.                                                                            
                                                                                                                                
1:35:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON inquired whether  the division of ownership                                                               
representation with TransCanada  and the State of  Alaska is that                                                               
the tax gas with TransCanada  is represented in the gas treatment                                                               
plant  and the  pipeline,  and the  royalty  in-kind interest  is                                                               
represented by the LNG facility.                                                                                                
                                                                                                                                
MR. DUBLER  answered no,  the tax  as gas is  roughly 12  or 12.5                                                               
percent and the royalty on most  of the fields is also about 12.5                                                               
percent.  So, the total of  25 percent is the state's interest in                                                               
the entire project, and of  that entire project TransCanada would                                                               
hold the state's interest in  the midstream portion, which is the                                                               
pipe and  the gas treatment plant  (GTP), and AGDC would  own the                                                               
25 percent at the LNG facility.                                                                                                 
                                                                                                                                
REPRESENTATIVE SEATON asked  how those break out as  far as value                                                               
of royalty  and tax  gas as  far as  the ownership  split between                                                               
those two.                                                                                                                      
                                                                                                                                
MR. DUBLER replied the royalty share  is about 12.5 percent.  The                                                               
tax  as  gas  is  subject   to  negotiation,  he  said,  and  his                                                               
understanding is  that the  DOR commissioner  has the  ability to                                                               
set that.   The tax  as gas is estimated  to be somewhere  in the                                                               
range of 10-15 percent.                                                                                                         
                                                                                                                                
REPRESENTATIVE  SEATON inquired  whether some  of the  value from                                                               
the state's royalty  gas is going to be  TransCanada's portion of                                                               
the  ownership of  the project,  so  that the  state is  actually                                                               
transferring royalty gas to TransCanada as well as tax gas.                                                                     
                                                                                                                                
MR. DUBLER  responded no,  the actual ownership  of the  gas will                                                               
not  change  hands  to  TransCanada;   TransCanada  is  just  the                                                               
pipeline  company  that  transports  the gas.    For  example,  a                                                               
railroad does not  necessarily own the goods  that it transports,                                                               
it owns  the train and the  tracks and someone pays  the railroad                                                               
to transport their  goods.  It would be the  exact same case with                                                               
the  pipeline and  the gas  - TransCanada  would own  the state's                                                               
portion of the pipeline and the  state would ship its gas through                                                               
the pipeline,  but the  state would retain  ownership.   The same                                                               
would  hold true  with the  LNG facility  - AGDC  would not  take                                                               
ownership of the gas.                                                                                                           
                                                                                                                                
REPRESENTATIVE HAWKER said Mr. Dubler's answer is on point.                                                                     
                                                                                                                                
1:39:17 PM                                                                                                                    
                                                                                                                                
FRITZ  KRUSEN,   Vice  President,  Alaska  LNG,   Alaska  Gasline                                                               
Development  Corporation (AGDC),  turned to  slide 10  to discuss                                                               
some of  the technical  things that the  Alaska LNG  Project team                                                               
has been doing since the  joint venture [agreement] was signed at                                                               
the end of June 2014.  He  said the AGDC board approved an Alaska                                                               
LNG  budget  of $39.8  million  for  calendar  year 2015.    This                                                               
budget, in  turn, is  set on  the work plan  and budget  that the                                                               
Alaska LNG  Project team has put  together.  The AGDC  Alaska LNG                                                               
is working very hard with the  Alaska LNG Project to find some of                                                               
the  common points  mentioned by  Mr. Richards  to save  money by                                                               
only spending  the money one time  for both projects.   While the                                                               
Alaska LNG  Project is far away  from its current target  date of                                                               
2019  for the  actual sanction/final  investment decision  (FID),                                                               
that doesn't mean  AGDC Alaska LNG is not out  doing things.  For                                                               
example, during  the summer 2014  field season AGDC had  over 250                                                               
people drilling boreholes up and  down the pipeline right-of-way,                                                               
doing geotechnical investigations at  the future [LNG] plant site                                                               
in Nikiski,  and sailing in the  Cook Inlet looking at  how to do                                                               
the pipeline  crossing of Cook  Inlet.   Of those 250  people, 80                                                               
percent were  Alaskans, indicating  that both  the AGDC  team and                                                               
the  Alaska LNG  Project team  take Alaska  hire very  seriously.                                                               
The   Alaska  LNG   Project's  web   site  includes   places  for                                                               
contractors to register their interest in serving the project.                                                                  
                                                                                                                                
1:41:56 PM                                                                                                                    
                                                                                                                                
MR. KRUSEN  noted the Alaska  LNG Project  is in Pre-FEED  and is                                                               
therefore one  step behind the  ASAP Project.  Pre-FEED  is where                                                               
the big engineering  firms are brought in  and enough engineering                                                               
is  done to  describe  and  optimize the  concept  that has  been                                                               
selected.   The gas treatment  plant is  being handled by  URS of                                                               
Denver,  Colorado, with  a subcontractor  called  CBI and  Alaska                                                               
knowledge being  provided by Alaska Slope  Regional Corporation's                                                               
Energy  Services (AES).   The  pipeline is  being done  by Worley                                                               
Parson of Calgary.  The LNG plant  is being led by CBI, which has                                                               
teamed  up with  the Japanese  company, and  Alaska knowledge  is                                                               
being provided  by AES.  Chiyoda  has built many huge  LNG plants                                                               
around the  world.  The  marine facilities are being  designed by                                                               
CH2M  Hill  with  Alaska  input   being  provided  by  CH2M  Hill                                                               
Anchorage.   It is a  big engineering project  as well as  a huge                                                               
regulatory/permitting-type  project.   The  Department of  Energy                                                               
has  authorized [the  Alaska  LNG  Project] to  export  up to  20                                                               
million tons of  LNG per year to free  trade agreement countries.                                                               
He offered his  believe that this amount is 16  times bigger than                                                               
the  Kenai LNG  plant.   The lead  agency is  the Federal  Energy                                                               
Regulatory  Commission (FERC),  he said.   Sixty  public meetings                                                               
have been conducted across Alaska  for people along the right-of-                                                               
way and for interest groups.   Eventually an environmental impact                                                               
statement will be filed, but  the Alaska LNG Project is currently                                                               
in the  pre-file phase.   Twelve resource reports  describing the                                                               
impacts to  the air, water,  and so  forth, will be  submitted to                                                               
FERC, with  the first draft of  those to be submitted  next week.                                                               
Soon after submission  the resource reports will  be available to                                                               
the public via the FERC web site.                                                                                               
                                                                                                                                
MR. FAUSKE noted  that CBI is Chicago Bridge &  Iron, a firm that                                                               
has been doing business in Alaska for many years.                                                                               
                                                                                                                                
1:45:39 PM                                                                                                                    
                                                                                                                                
MR. RICHARDS  moved to slide  11, addressing AGDC's role  in both                                                               
projects and  seriously taking the  legislative mandate  for AGDC                                                               
to  not duplicate  work and  to  utilize the  state's funding  to                                                               
advance the  projects.   A tremendous  amount of  information has                                                               
been gathered  in the past  by previous pipeline  projects trying                                                               
to  get  the North  Slope  gas  to  commercial markets,  but,  he                                                               
pointed  out, that  development data  is held  by the  companies.                                                               
When AGDC  started with the ASAP  Project it was known  that that                                                               
data  was available,  and AGDC  has been  trying to  acquire that                                                               
data  and  not have  to  drill  holes  right next  to  previously                                                               
drilled holes.   So, AGDC worked a  cooperation agreement between                                                               
the two  projects and data  from thousands of boreholes  has been                                                               
exchanged,  therefore  saving  tens  of millions  of  dollars  in                                                               
unnecessary work effort.  This  effort is being continued by AGDC                                                               
to avoid duplication in terms  of advancing the projects for what                                                               
is now a  common pipeline route.  Collaborative  work is underway                                                               
for hydrologic work, waterways work  looking at stream crossings,                                                               
and civil  designs for  a pipeline  work pad,  as well  as access                                                               
roads and access to material sites or sites for common pipe lay-                                                                
down yards or camp facilities.   Additionally, the metallurgy and                                                               
materials testing  completed by AGDC for  the X70 pipe is  now of                                                               
keen interest to the Alaska LNG  Project as that project lands on                                                               
the specific  pipe grade  that it  wants to  proceed with  in its                                                               
design  efforts.   Looking to  the future,  AGDC has  cooperation                                                               
agreements for  field work  as well as  engineering that  AGDC is                                                               
conducting and  will be  conducting for  the Alaska  LNG Project.                                                               
For  instance,  AGDC  is  out drilling  boreholes  again  in  the                                                               
Prudhoe Bay  area and will then  be looking at material  sites up                                                               
and down the pipeline.   That work will be done  by AGDC but will                                                               
be on a cost sharing basis between the two projects.                                                                            
                                                                                                                                
1:48:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON asked  whether the  cost sharing  basis is                                                               
the same cost share as ownership share of the total project.                                                                    
                                                                                                                                
MR.  RICHARDS answered  no,  it  is not  based  on the  ownership                                                               
model.   Rather, it is based  on a negotiated rate  that AGDC and                                                               
the Alaska LNG Project have  agreed to for fair representation of                                                               
what  the  costs would  be,  as  well  as  the benefit  to  those                                                               
projects from those work efforts.   Where AGDC is doing work that                                                               
will  solely  benefit  the  Alaska  LNG  Project,  such  as  pipe                                                               
centerline  boreholes  where the  pipelines  differ  in terms  of                                                               
their  terminus, then  those costs  will be  borne solely  by the                                                               
Alaska LNG Project.                                                                                                             
                                                                                                                                
REPRESENTATIVE  SEATON  inquired what  the  cost  sharing is  for                                                               
those parts that  are shared, such as the  shared pipeline route,                                                               
or welding and specifications, or the discontinuous permafrost.                                                                 
                                                                                                                                
MR. RICHARDS replied that AGDC  is in that commercial negotiation                                                               
right now and will need to  conclude that before it can represent                                                               
the outcome.                                                                                                                    
                                                                                                                                
MR. TANGEMAN  noted that Mr.  Richards is referring to  the value                                                               
of the product  that AGDC is producing;  Representative Seaton is                                                               
referring to how  that will be reimbursed and that  will be based                                                               
on  the  different  ownership portions  that  the  companies  and                                                               
TransCanada have, which  is the 25 percent.  So,  the dollar that                                                               
will be reimbursed  to [AGDC] will be 25 percent  for each of the                                                               
participants.                                                                                                                   
                                                                                                                                
1:51:03 PM                                                                                                                    
                                                                                                                                
MR. RICHARDS discussed  the ASAP Project's Class  3 cost estimate                                                               
(slide  12).   He pointed  out that  when referring  to the  ASAP                                                               
Project,  he is  identifying a  total  installed cost  - the  gas                                                               
conditioning facility  on the North Slope,  the approximately 730                                                               
miles  of pipeline  from  the  North Slope,  and  tying into  the                                                               
existing  ENSTAR Natural  Gas  Company's  system in  Southcentral                                                               
Alaska.  In 2012 AGDC  originally presented to the legislature an                                                               
estimate  of approximately  $7.7  billion to  construct the  ASAP                                                               
Project.   That estimate  represented a  Class 4  level estimate,                                                               
which  is  a  factored  engineered estimate  utilizing  the  best                                                               
information had at  the time.  Inflation over the  last two years                                                               
represents  about $889  million  to the  original 2012  estimate.                                                               
The Class  3 estimate  represents the  work just  concluded after                                                               
AGDC's detailed  engineering analysis.   This estimate  of $9.968                                                               
billion  is represented  as Class  3, plus  or minus  20 percent.                                                               
That aligns to what is known  as the American Association of Cost                                                               
Estimators' classification  of estimates,  which is based  on the                                                               
level of  detail, the level  of work effort, and  the granularity                                                               
that  is  had in  designing  a  process  plant  such as  the  gas                                                               
conditioning facility.                                                                                                          
                                                                                                                                
1:53:10 PM                                                                                                                    
                                                                                                                                
MR. RICHARDS  explained that the  Class 3 estimate also  looks at                                                               
the overall annual operations and  [maintenance] cost for an ASAP                                                               
Project, which  is estimated to  be $147 million, as  compared to                                                               
the 2012 factored  cost [of $152 million].  As  well, AGDC looked                                                               
at  the end  result of  the pipeline  project because  regulators                                                               
will  require   AGDC  to  conduct  dismantlement,   removal,  and                                                               
restoration  (DR&R),  which  represents $324  million  in  future                                                               
cost.  Further,  AGDC identified the $353 million  that the State                                                               
of Alaska provided  to AGDC to advance the ASAP  Project; this is                                                               
the money  that AGDC has  been using to  be able to  develop this                                                               
work.  The  two major cost components of the  project are the gas                                                               
conditioning facility  and the  pipeline.   At $3.18  billion the                                                               
gas conditioning  facility represents 32 percent  of the project,                                                               
so that facility  alone is a megaproject.  At  $6.788 billion the                                                               
nearly   800-mile-long   pipeline   is  a   second   megaproject.                                                               
Combined, the  project is  nearly $10  billion.   This is  a very                                                               
solid  number, having  been  built  from the  ground  up by  AGDC                                                               
bringing   onboard  major   heavy  civil   contractors,  pipeline                                                               
contractors, horizontal  directional drilling  [contractors], and                                                               
process vendors  and fabrication  yards to  build up  this quote.                                                               
Therefore,  AGDC  has  a confidence  level  of  approximately  75                                                               
percent that this  number represents what it would  cost to build                                                               
this project in 2014 dollars.                                                                                                   
                                                                                                                                
1:55:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON requested Mr.  Richards to expound upon the                                                               
DR&R cost and  whether that becomes a basis for  return on equity                                                               
and whether that amount is actually  put into an account up front                                                               
or is simply an accounting line on the books.                                                                                   
                                                                                                                                
MR.  RICHARDS responded  that AGDC  wanted to  identify what  the                                                               
DR&R cost would be so it  could be included in AGDC's tariffs and                                                               
accumulating in that account for  that future cost.  It literally                                                               
would be  pennies as represented  in the tariff, but  AGDC wanted                                                               
to be  able to articulate  when looking  at the overall  cost for                                                               
Alaskans  that  it was  going  to  include  that future  cost  to                                                               
dismantle,  remove,   and  restore   to  meet   those  regulatory                                                               
requirements that will be placed on AGDC in its permits.                                                                        
                                                                                                                                
REPRESENTATIVE SEATON inquired whether  that money would actually                                                               
be put aside in an account or will  just be on the books as money                                                               
owed  in the  future.   He  further inquired  whether  DR&R is  a                                                               
requirement for the Alaska LNG Project.                                                                                         
                                                                                                                                
MR. RICHARDS  answered that for  going forward to  the Regulatory                                                               
Commission of  Alaska (RCA), AGDC  has built its tariff  model to                                                               
identify  that DR&R  would  be a  cost factor  and  it is  AGDC's                                                               
intention to  be able to assess  those costs to the  consumer and                                                               
build up  that fund to  be able  to meet AGDC's  obligations into                                                               
the  future.    He  deferred  to his  colleague  to  answer  this                                                               
question as regards the Alaska LNG Project.                                                                                     
                                                                                                                                
MR. KRUSEN  replied he knows that  the Alaska LNG Project  in its                                                               
Pre-FEED phase  will identify the  DR&R cost, as  appropriate for                                                               
that  level.   However, the  commercial  side is  not far  enough                                                               
along to know  just how that will  be put into a rate  base for a                                                               
FERC [Class  3] type project.   The Alaska LNG Project  will come                                                               
up with the DR&R cost estimate but  it will not be as advanced as                                                               
what the ASAP Project has done for its Class 3 estimate.                                                                        
                                                                                                                                
1:58:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON stated  he wants to ensure that  as DR&R is                                                               
considered and built into the  tariff that that money is actually                                                               
put aside as it  is collected from the consumers.   If it is just                                                               
being put  on the corporate books  and a project is  sold at some                                                               
point in time that money may or  may not be there, just like with                                                               
the Trans-Alaska Pipeline  System.  If DR&R is going  to be in on                                                               
the  tariff  side,  he  wants  to ensure  it  is  actually  being                                                               
accumulated for the State of Alaska.                                                                                            
                                                                                                                                
MR.  FAUSKE offered  his assurance  that not  only the  DR&R, but                                                               
also  the reimbursement  to the  State of  Alaska of  the initial                                                               
seed  money  to  carry  [the  ASAP  Project]  forward,  would  be                                                               
reimbursed to  the state  and would  be accounted  for separately                                                               
and not  just a  footnote to  the financials.   There would  be a                                                               
fund of some  sort or an accounting book entry  that would see to                                                               
it that  these monies  are segregated,  and stated,  and reserved                                                               
for the stated purpose that they were intended for.                                                                             
                                                                                                                                
REPRESENTATIVE SEATON  offered his appreciation for  Mr. Fauske's                                                               
answer and said  it solves a lot of questions  that he often gets                                                               
asked on projects.                                                                                                              
                                                                                                                                
2:00:21 PM                                                                                                                    
                                                                                                                                
MR.  DUBLER addressed  slide 13,  explaining that  the commercial                                                               
team  ran  the technical  team's  cost  estimates through  AGDC's                                                               
tariff model, a  tariff model that was  designed specifically for                                                               
the ASAP  Project.  The  model has hundreds of  assumptions which                                                               
results in a tariff rate range  rather than a single number.  The                                                               
team feels that  all of the assumptions were  reasonable and some                                                               
were more conservative  than others.  The team  wanted to present                                                               
a  range of  projected tariffs  because projecting  a tariff  of,                                                               
say,  $6.23, would  imply a  degree of  accuracy that  just isn't                                                               
there with  a projection like  this.  All  in all the  team feels                                                               
that these are reasonable tariffs.   He directed attention to the                                                               
2014 estimate of  projected tariff range for  Fairbanks, which is                                                               
$5.50-$6.75, with  a burner  tip cost  of $11.50-$14.00.   Burner                                                               
tip  cost  is  what  end  users would  pay  at  their  homes,  he                                                               
explained.  The  difference in burner tip  cost between Fairbanks                                                               
and Anchorage  [$11.50-$14.50] is due to  the local distribution.                                                               
ENSTAR's  local  distribution system  in  Anchorage  is a  mature                                                               
system that has  a lot lower charge for people  in Anchorage than                                                               
what an [eventual]  utility in Fairbanks will be  able to charge.                                                               
This  is because  the Fairbanks  utility will  have to  build its                                                               
system  out with  current dollars,  while the  ones in  Anchorage                                                               
were built  mostly in  the 1960s  and 1970s and  the ones  in the                                                               
Matanuska-Susitna Valley were built in  the 1980s.  Thus, much of                                                               
the  cost   has  already  been   recovered  by  ENSTAR   and  its                                                               
distribution charge  reflects that.  Continuing,  Mr. Dubler said                                                               
AGDC has  estimated the cost of  gas at between $2.00  and $3.30.                                                               
When this cost is added  to the Fairbanks local distribution cost                                                               
of $4.00 it  results in a burner tip cost  of $11.50-$14.00.  The                                                               
Anchorage tariff  would be  in the range  of $8.00-$9.75,  with a                                                               
burner  tip cost  of $11.50-$14.50.   He  pointed out  that while                                                               
hundreds of  assumptions were made,  the major  assumptions were:                                                               
a 70/30  debt to equity ratio,  a 12 percent return  on equity, a                                                               
5.7  percent   construction  financing   cost,  and  a   25  year                                                               
depreciation.   The 12  percent return on  equity assumes  that a                                                               
third  party pipeline  company builds,  runs, owns,  and operates                                                               
this  project for  AGDC.   It has  been said  all along  that the                                                               
state doesn't operate  gas pipelines for a living,  but there are                                                               
people who  do and therefore those  experts would be hired  to do                                                               
that.  The 5.7 percent  construction financing cost is relatively                                                               
high,  as is  the 25  year depreciation,  but AGDC  wanted to  be                                                               
conservative in those assumptions.                                                                                              
                                                                                                                                
2:03:59 PM                                                                                                                    
                                                                                                                                
MR. FAUSKE  added that  two primary  benchmarks have  always been                                                               
considered with the  ASAP Project going forward.   One is whether                                                               
this  project can  be done  in a  time horizon  and/or at  a cost                                                               
where the resulting  tariff is at or below what  it would cost to                                                               
import LNG.  He said AGDC believes  it has done that based on the                                                               
information it  currently has.   More  important, AGDC  wanted to                                                               
see whether it ends up with  a tariff that is commercial and this                                                               
is where  it gets  a little  sticky.  (Indisc.  - break  in audio                                                               
sound) still designing to and there  is currently a great deal of                                                               
debate  about  that  now  with  removal  of  the  Alaska  Gasline                                                               
Inducement Act (AGIA)  and some other discussions.   It is tricky                                                               
in the  sense that AGDC is  partners with Alaska LNG  Project but                                                               
AGDC continues to  get asked this question.  On  the worst day of                                                               
the winter  about 250 million  cubic feet of  gas is used  on the                                                               
Railbelt and where  the ASAP Project is designed.   The intent is                                                               
to sell the  residual 250-300 million cubic feet of  gas a day to                                                               
help keep  the tariff down.   Of concern to AGDC  is whether that                                                               
residual  250  million  cubic  feet attached  with  a  tariff  is                                                               
commercial.   He  said he  is unsure  he can  answer that  in the                                                               
affirmative if  this residual gas  was to  go to "an  Agrium, for                                                               
instance, or a Donlin Mine" or  others that might want to use it.                                                               
But his  response to  that is  that as  the volume  is increased,                                                               
tariffs go down.  The ASAP  Project is still based on 500 million                                                               
cubic feet per  day, which prior was a  statutory requirement and                                                               
now  is  an  administrative  or   policy  requirement,  and  AGDC                                                               
continues to design to that level.                                                                                              
                                                                                                                                
MR.  TANGEMAN   noted  that  while  the   distribution  cost  for                                                               
Anchorage is significantly  lower because of the  maturity of the                                                               
distribution  system, the  distance to  market between  Fairbanks                                                               
and Anchorage is why there is a difference in the tariff rate.                                                                  
                                                                                                                                
2:07:04 PM                                                                                                                    
                                                                                                                                
MR. RICHARDS  reviewed the ASAP  Project design  capacity, saying                                                               
that slide  14 provides the  history as  to why the  ASAP Project                                                               
was designed  with the limitation  of 500 million  standard cubic                                                               
feet  a day.   This  figure  was based  on the  AGIA license  and                                                               
statutes from  the 2008 timeframe,  and ultimately  AGDC advanced                                                               
its  project  with that  design  premise.   Things  changed  this                                                               
summer with  the passage of  Senate Bill 138 and  then ultimately                                                               
the termination  of the license with  TransCanada and essentially                                                               
the lifting  of that  statutory and  commercial ceiling  on ASAP.                                                               
Currently the  design case is  500 million.   It has to  meet the                                                               
commercial  interests, specifically  the commercial  interest for                                                               
larger industrial clients.  If in  the future ASAP is the project                                                               
that will  proceed, AGDC has  the option  to make changes  to the                                                               
design  in terms  of adding  compression or  increasing the  pipe                                                               
strength or  treatment capacity,  which would vastly  improve the                                                               
project economics and lower the tariff rates for Alaskans.                                                                      
                                                                                                                                
2:08:38 PM                                                                                                                    
                                                                                                                                
MR.  RICHARDS  outlined ASAP's  revised  spend  plan (slide  15).                                                               
With  passage  of  Senate  Bill  138  and  the  aligning  of  the                                                               
schedules between the  two projects, he explained,  AGDC saw that                                                               
with  its work  effort completing  the Class  3 estimate  and the                                                               
project execution plan,  that it needed to look  at its projected                                                               
spend rate over the next couple  years to keep the project moving                                                               
forward,  maintaining   is  viability  and  readiness,   but  not                                                               
expending too much of the  people's money unnecessarily.  He drew                                                               
attention to the top [red] line  on the chart, stating that it is                                                               
the approved  plan budget that  was presented to  the legislature                                                               
in  AGDC's   plan  of  development   originally.     Through  the                                                               
appropriation process,  AGDC was granted  the money which  is now                                                               
residing in the  in-state natural gas pipeline fund.   The bottom                                                               
[green] line is  AGDC's new 2015/2016 work plan  under which AGDC                                                               
will  complete its  supplemental  environmental impact  statement                                                               
with the  NEPA process that will  result in a record  of decision                                                               
and  the granting  of the  federal lands  to AGDC.   Right-of-way                                                               
work  will  continue  on  the   pipeline  centerline  along  with                                                               
expansion and  exploration for material  sites.   Engagement with                                                               
regulatory partners will continue,  specifically the Pipeline and                                                               
Hazardous  Materials Safety  Administration (PHMSA)  on the  pipe                                                               
metallurgy and  design, as well  as concluding  material testing.                                                               
Additionally, AGDC will look to  refine its construction planning                                                               
and  logistics for  how  to best  construct  this megaproject  as                                                               
quickly and  as low cost  a timeframe  as possible.   The overall                                                               
goal  is  keep  ASAP  a  viable project  and  for  AGDC  to  work                                                               
cooperatively  and collaboratively  with the  Alaska LNG  Project                                                               
over the next 15 months until  the decision is made on whether to                                                               
proceed  into front-end  engineering  and design  (FEED) for  the                                                               
Alaska LNG Project.                                                                                                             
                                                                                                                                
MR. FAUSKE  pointed out  that the  ASAP Project  spend plan  is a                                                               
reduction of  $90 million,  down to  a plan of  $60 million.   He                                                               
said AGDC started  on this several months ago because  it made no                                                               
sense for  AGDC to get  way ahead of  the Alaska LNG  Project and                                                               
hold  an open  season  and  other things  as  there  would be  no                                                               
participation.   This  tied in  fairly  well with  Administrative                                                               
Order 271 in  which Governor Walker requested  projects to reduce                                                               
their spend  plan; he  offered his belief  that the  budget which                                                               
came out  yesterday has  the [$60,426,417]  dollar amount.   This                                                               
has been ongoing work that  extends the schedule but keeps things                                                               
viable and usable into the future.                                                                                              
                                                                                                                                
2:12:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON asked  if calculations  have been  done on                                                               
whether doubling the  volume to 1 billion cubic feet  a day would                                                               
be commercially viable for selling to mines or for LNG.                                                                         
                                                                                                                                
MR. FAUSKE answered that AGDC is  in the process of running those                                                               
numbers  now  and  has  an arrangement  with  the  Department  of                                                               
Revenue to utilize  DOR's information on taxes on  gas given that                                                               
there are a lot of different  calculations.  He commended DOR and                                                               
the  administration  for  availing  these numbers  so  that  AGDC                                                               
didn't  have to  waste  time and  energy developing  mathematical                                                               
models to  make this determination.   Data has been  submitted to                                                               
DOR and information from DOR should be received by AGDC soon.                                                                   
                                                                                                                                
2:13:48 PM                                                                                                                    
                                                                                                                                
MR. RICHARDS highlighted ASAP's  revised schedule (slide 16) that                                                               
would align  the two  projects.  He  said the  original timeframe                                                               
had  the ASAP  Project moving  through a  recourse tariff  filing                                                               
with  the  Regulatory Commission  of  Alaska  with a  sanctioning                                                               
decision to be made in fourth  quarter 2016 and completion of the                                                               
project at  the end of 2021.   Now the ASAP  schedule is deferred                                                               
to align  with the  Alaska LNG Project's  FEED decision  in first                                                               
quarter 2016.   If the  Alaska LNG Project proceeds  forward, the                                                               
ASAP  Project will  not.   If  the Alaska  LNG  Project does  not                                                               
proceed forward,  then the [ASAP  Project's] revised  timeline to                                                               
look at the commercial interest, to  look at the redesign, and to                                                               
go  through  the  tariff  filing  as well  as  the  execution  or                                                               
construction, puts the first gas at third quarter 2024.                                                                         
                                                                                                                                
MR. RICHARDS presented AGDC's corporate  focus (slide 17) for the                                                               
next  year and  a  half  in advancing  the  ASAP  and Alaska  LNG                                                               
projects.  He  said AGDC's key focus  is developing transferrable                                                               
and durable work  that can be used on either  project in order to                                                               
meet  the  intent  of  getting  gas to  Alaskans  as  quickly  as                                                               
possible.   Also,  AGDC  was  funded to  protect  the state's  25                                                               
percent  ownership  in the  Alaska  LNG  Project, which  AGDC  is                                                               
taking very  seriously.  Additionally,  AGDC wants to be  able to                                                               
use its  leverage to continue to  build on what it  has developed                                                               
for the  ASAP Project and  what it  can develop for  any pipeline                                                               
project moving forward,  and that is keeping the  ASAP Project as                                                               
a  viable alternative.   Further,  AGDC will  be working  to keep                                                               
abreast of all  of those Alaska LNG Project  components to ensure                                                               
that  AGDC is  protecting the  state's  interest -  from the  LNG                                                               
through the pipeline and into the gas conditioning facility.                                                                    
                                                                                                                                
2:16:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON, regarding  protection  of the  state's                                                               
interest, noted the state has  the opportunity to make a decision                                                               
at  the end  of  2015 on  the equity  option  on the  TransCanada                                                               
partial share.   He asked at  what point the state  would have to                                                               
invest the $2 or $3 billion to exercise that option.                                                                            
                                                                                                                                
MR. DUBLER  replied that the  real spend  starts in FEED  and the                                                               
projection  is about  $1-$1.5 billion.   Assuming  TransCanada is                                                               
still involved the  state's 25 percent would be  $400 million if,                                                               
for purposes  of easy  math, a  figure of  $1.6 billion  is used.                                                               
TransCanada would  pay the midstream  portion of that and  if the                                                               
split is, say, 50/50, AGDC would  need about $250 million at that                                                               
point.   He  said FEED  could start  as early  as second  quarter                                                               
2016, although that is a very optimistic date.                                                                                  
                                                                                                                                
MR. TANGEMAN  clarified that  at that point  the state  will have                                                               
the  option  to either  buy  in  for 40  percent  or  to buy  out                                                               
TransCanada  so each  goes separate  ways.   If  buying into  the                                                               
project at 40 percent, the  state will owe TransCanada 40 percent                                                               
of the  cost to date  and then will take  over 40 percent  of the                                                               
pipeline and gas treatment plant  (GTP) costs going forward.  The                                                               
buying out option would be  complete 100 percent reimbursement to                                                               
TransCanada.  Responding further  to Representative Josephson, he                                                               
clarified that in the buy-in  option the state would basically be                                                               
buying 40 percent,  TransCanada would be keeping  60 percent, and                                                               
both parties would proceed as partners.                                                                                         
                                                                                                                                
2:19:26 PM                                                                                                                    
                                                                                                                                
MR.  RICHARDS moved  to slide  18, continuing  his discussion  of                                                               
AGDC's  corporate focus.    An  issue for  both  projects is  the                                                               
quantifying of in-state  gas demand, he said, so  AGDC is looking                                                               
to get better  granularity in defining what that will  be for the                                                               
larger communities  of Fairbanks,  Anchorage, and  the Matanuska-                                                               
Susitna Borough, as well as  the smaller communities and resource                                                               
developments that would  be occurring along the  line.  Off-takes                                                               
must  be  designed for  access  to  the  pipelines and  AGDC  has                                                               
defined four sizes - macro, micro,  mini, and nano - based on the                                                               
amount of  gas consumption coming from  those.  To look  at where                                                               
off-takes  will  be  located,  AGDC plans  to  talk  to  resource                                                               
developers and communities.  Also,  AGDC is coordinating with the                                                               
other  agencies  -  Alaska Energy  Authority,  Alaska  Industrial                                                               
Development  and  Export  Authority, and  Department  of  Natural                                                               
Resources -  as directed by  the legislature to look  at in-state                                                               
gas access to provide energy for Alaskans.                                                                                      
                                                                                                                                
MR.  RICHARDS discussed  the project  funding status  (slide 19),                                                               
noting the  legislature created two  different funds for  AGDC to                                                               
use  in advancing  these two  projects.     The Alaska  liquefied                                                               
natural gas project  fund was funded last year  under Senate Bill                                                               
138 [AS 31.25.110], giving AGDC  about $69.8 million to cover the                                                               
expenses of  the cash calls  that would  be coming in  for AGDC's                                                               
representation in  the LNG plant.   Expenditures will  be ongoing                                                               
through fiscal year 2016, which  is the timeframe that represents                                                               
approximately  the  FEED  decision.   The  in-state  natural  gas                                                               
pipeline  fund [AS  31.25.100] was  appropriated  to advance  the                                                               
ASAP Project.   Approximately $420  million was  advanced through                                                               
AGDC and through previous iterations  with DNR and the governor's                                                               
office  for  this  project.   About  $120  million  was  expended                                                               
through  fiscal year  2014.   Under  the aforementioned  spending                                                               
plan $98  million will be  expended in  fiscal year 2015  and $51                                                               
million will  be spent in  fiscal year 2015, leaving  a projected                                                               
balance in the fund of approximately $150 million.                                                                              
                                                                                                                                
MR.  TANGEMAN  pointed  out  that the  balance  of  $150  million                                                               
represents the  delay, or  the realignment  of the  two projects.                                                               
It is  not money  that is  left over,  it is  money that  will be                                                               
required in fiscal  year 2016 to react to whatever  the option is                                                               
going forward.   So, really, that $150 million is  a small, small                                                               
portion of  the seed money that  will take the state  to the next                                                               
step  - either  the ASAP  Project continuing  or going  into FEED                                                               
under the Alaska LNG Project.                                                                                                   
                                                                                                                                
2:23:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TARR  understood AGDC  is budgeting on  a calendar                                                               
year and  therefore, she  concluded, AGDC's  fiscal year  2015 is                                                               
the  actual calendar  year 2015  rather than  the state's  fiscal                                                               
year of July 1-June 30.                                                                                                         
                                                                                                                                
MR. TANGEMAN responded  that Mr. Dubler spoke to  the $39 million                                                               
in calendar year  2015.  The Alaska LNG Project  does budget on a                                                               
calendar year, so  that is where some of the  confusion is; while                                                               
AGDC and the ASAP Project are under a fiscal year.                                                                              
                                                                                                                                
2:23:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  inquired whether  the $51 million  in ASAP                                                               
Project  expenditure   [slide  19]  represents  a   $200  million                                                               
expenditure  that is  the  state's  25 percent  or  is the  total                                                               
expenditure that is taking place.                                                                                               
                                                                                                                                
MR.  TANGEMAN answered  that ASAP  is 100  percent funded  by the                                                               
state so there  are no other participating interests  in the ASAP                                                               
Project.  Thus  [the right column on slide 19]  is 100 percent of                                                               
the state funding for ASAP.                                                                                                     
                                                                                                                                
REPRESENTATIVE  SEATON offered  his  understanding  that as  ASAP                                                               
went forward from  this point, money was being expended  in a way                                                               
that  would coordinate  with  and  be usable  by  the Alaska  LNG                                                               
Project.   Therefore,  if  that project  was  being helped  there                                                               
would be a cost sharing instead  of the state being a 100 percent                                                               
contributor  to those  things that  will be  beneficial to  or be                                                               
used by the Alaska LNG Project.                                                                                                 
                                                                                                                                
MR. DUBLER  replied that this  represents the  entire expenditure                                                               
AGDC is anticipating  in those years.  According  to the attorney                                                               
general's office,  he explained, any reimbursements  to AGDC from                                                               
the Alaska  LNG Project for  work would be general  fund revenues                                                               
and would come  back into the treasury.   These figures therefore                                                               
represent the amount  that is spent and anything  reimbursed is a                                                               
revenue back to the state.                                                                                                      
                                                                                                                                
MR. FAUSKE  added that  the reimbursement  revenue "could  be re-                                                               
appropriated  to the  project"  depending on  the  desire of  the                                                               
legislature  and the  governor at  that  time.   Revenue will  be                                                               
generated through  the sale of  assets and negotiations  and that                                                               
money will  flow back  to the  state; AGDC  is not  authorized to                                                               
expend reimbursements.  Those dollar  amounts will be reported to                                                               
the legislature  and the  legislature will deem  what to  do with                                                               
those funds.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON  said  that  the reporting  back  will  be                                                               
beneficial to  legislators understanding  the net values  and the                                                               
net contribution to the state.                                                                                                  
                                                                                                                                
2:26:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  observed that  one  of  the five  AGDC                                                               
objectives listed on  slide 4 is to  commercialize Alaska's North                                                               
Slope  gas resources.   He  understood from  a meeting  yesterday                                                               
that a new  DNR section will be run by  [DNR Deputy Commissioner]                                                               
Rutherford and  this section  has about eight  staff and  has the                                                               
same objective.   He  presumed that Ms.  Rutherford's work  is to                                                               
represent the sovereign  interest and is sort of  a political arm                                                               
of the government  and that AGDC is  representing the partnership                                                               
share.   He said he  wants to be confident  that there is  a "red                                                               
phone"  in the  lines of  communication and  everyone understands                                                               
what the other side is doing.                                                                                                   
                                                                                                                                
MR. DUBLER  replied that, from AGDC's  perspective, the objective                                                               
to commercialize Alaska's North Slope  gas resource is to build a                                                               
pipeline to  allow DNR to  commercialize the natural gas  via gas                                                               
sales contracts  where ever the  gas is sold, which  AGDC assumes                                                               
will  be Asia  or some  other country.   For  DNR to  be able  to                                                               
commercialize the North Slope natural  gas resource there must be                                                               
some mechanism to  get that gas to market and  that is where AGDC                                                               
comes  in.   He said  AGDC is  working closely  with DNR  and DOR                                                               
through the state gas team,  which has weekly phone calls between                                                               
himself  and the  head of  the project  team for  the Alaska  LNG                                                               
Project  to  ensure  coordination  on things  like  testimony  in                                                               
committees and  alignment of perspectives at  commercial meetings                                                               
to  make  certain  that  AGDC  is  representing  the  appropriate                                                               
position for the entire state.                                                                                                  
                                                                                                                                
MR. TANGEMAN  added that Deputy  Commissioner Rutherford  is part                                                               
of that team and is participating weekly.                                                                                       
                                                                                                                                
2:29:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TARR recalled Mr.  Steve Butt's statement that the                                                               
Alaska LNG Project is progressing  and people are working through                                                               
the areas of disagreement.  However,  Mr. Butt said he is not the                                                               
right person to  talk about any individual  disagreements and the                                                               
project sponsors need  to talk to the committee about  that.  She                                                               
inquired whether  AGDC has  any comment on  that since  the state                                                               
has representation on the teams.                                                                                                
                                                                                                                                
MR. FAUSKE answered that he sits  at a fairly high level on these                                                               
negotiations and  as a  member of  the sponsor's  team.   He said                                                               
there  is always  going  to be  project  issues versus  ownership                                                               
issues.  A great deal of progress  is being made in what he would                                                               
term  as a  very honest  effort  to move  forward.   There is  no                                                               
secret that  there are areas  of tension between  producers, they                                                               
are  competing companies,  but it  is a  healthy tension  and the                                                               
state  is well  represented in  that it  is at  the table,  has a                                                               
vote, and  can serve in  a capacity  to help bring  about certain                                                               
longstanding  disagreements  and  remind people  moving  forward.                                                               
This  is a  great  effort  going forward,  he  said,  and he  has                                                               
testified  in the  past that  he  is really  anxious about  first                                                               
quarter calendar year  2016 at the completion of FEED.   There is                                                               
a  period that  could go  as long  as a  year prior  to the  FEED                                                               
decision.  This  is a major decision by all  parties involved, it                                                               
is a  major project.   The attempt that  is going forward  now is                                                               
worthwhile and things  are moving well, and if  he thought things                                                               
were "going south"  he would say so.  Even  in light of declining                                                               
oil  prices, these  companies are  used to  cycles like  this and                                                               
they have 20-year to 50-year plans.                                                                                             
                                                                                                                                
2:33:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON noted  it has  been heard  throughout the                                                               
presentation that [the projects]  are working together.  However,                                                               
it is heard from people out  there that [the state] cannot afford                                                               
two pipelines and funding both  pipelines is silly.  He requested                                                               
AGDC  to outline  that [the  projects] are  working together  and                                                               
will eventually  merge such that  either the ASAP Project  or the                                                               
Alaska  LNG  Project  moves  forward,  thereby  not  wasting  the                                                               
investment being made now [by the state].                                                                                       
                                                                                                                                
MR. FAUSKE replied  he believes that not enough is  known at this                                                               
juncture  to make  an either/or  decision.   He said  he believes                                                               
[the state] has  never been this far down the  trail.  He further                                                               
believes that if [the state] gets  hasty in its decision that one                                                               
has to  go in deference  to the  other, people are  then ignoring                                                               
the  cooperation that  exists between  the two  projects and  the                                                               
sharing  of data.   Under  AGDC, ASAP  has accumulated  about $70                                                               
million in assets, the vast majority  of which can be used on the                                                               
other project.   If the  other project  were to cease  and desist                                                               
for any  reason, [the state]  has not  harmed itself.   The state                                                               
would have viable engineering and  technical data that could move                                                               
the  project  forward.    These are  tough  budgetary  times,  he                                                               
allowed,  but it  "costs  far more  to do  nothing  than to  find                                                               
ourselves  once again  standing  at the  curb  without a  project                                                               
going forward".  He recommended  staying the course because it is                                                               
not that much  farther down the road and there  will be much more                                                               
data to present  and maybe more definitive rationale as  to how a                                                               
project will go  forward.  The legislature controls  ASAP and has                                                               
created an  entity that is  doing its  job and that  has produced                                                               
valuable  assets  for  the  legislature  and  the  people.    The                                                               
legislature is a partner in the  other project, but does not have                                                               
total control.   To relinquish control of  something in deference                                                               
to one where  [the state is] a partner is  risky business at this                                                               
time until  more is known about  what the other project  is going                                                               
to do.   That is  in no way to  be a deferential  comment towards                                                               
the other  project, he  qualified, as there  is great  work going                                                               
forward but not enough is known yet.                                                                                            
                                                                                                                                
2:36:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HAWKER  thanked Mr. Fauske  and the AGDC  team and                                                               
said he  recognizes the  critical contributions  made by  DNR and                                                               
DOR  in working  with the  AGDC  team.   He said  AGDC has  truly                                                               
executed the  vision and direction that  the legislature demanded                                                               
of it  in House  Bill 369  and House  Bill 4.   Whether  the ASAP                                                               
Project does become  viable as a backup project or  whether it is                                                               
continued  and moved  into alignment  with a  project of  greater                                                               
scope has  always been  the mission  given AGDC.   It  has always                                                               
been  about getting  it  to be  the right  size  project for  the                                                               
future  of Alaska.    Passing Senate  Bill 138  last  year was  a                                                               
critical step in  moving the larger aligned  project forward, but                                                               
sight must  not be  lost on the  need to ensure  that there  is a                                                               
fallback  position.   Over the  past few  years legislators  have                                                               
directed  a  process  that  has  made  unprecedented  success  in                                                               
getting  Alaska's  North  Slope  natural gas  to  market.    More                                                               
important,  the   legislature  has   not  lost  sight   that  its                                                               
responsibility is to  get that energy into the  hands of Alaskans                                                               
who need  it.   He offered  his hope that  nothing is  allowed to                                                               
happen to  this project that  turns this incredible  success into                                                               
failure again,  concluding that  "we are really  on the  verge of                                                               
accomplishing our great task".                                                                                                  
                                                                                                                                
2:38:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON concurred with  Representative Hawker.  The                                                               
bottom line, he added, is  that the 29th Alaska State Legislature                                                               
expects, wants, and  will work hard to keep  the gasline projects                                                               
on time and on budget.                                                                                                          
                                                                                                                                
REPRESENTATIVE TARR  understood the legislature does  not have to                                                               
consider an  appropriation this year  for any  operating expenses                                                               
because everything was previously funded.                                                                                       
                                                                                                                                
MR. TANGEMAN confirmed AGDC is  not requesting any appropriations                                                               
and does not have any bills before the legislature.                                                                             
                                                                                                                                
2:39:56 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Resources Standing Committee meeting was adjourned at 2:40 p.m.                                                                 

Document Name Date/Time Subjects
2.6.15 HSE RES AGDC Presentation.pptx HRES 2/6/2015 1:00:00 PM
Alaska Gasline Development Corporation Update