Legislature(2015 - 2016)BARNES 124
02/06/2015 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| Update: Alaska Gasline Development Corporation | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
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 |