02/17/2023 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HJR6 | |
| HB50 | |
| HJR6 | |
| HB50 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HJR 6 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | HB 50 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
February 17, 2023
1:01 p.m.
MEMBERS PRESENT
Representative Tom McKay, Chair
Representative George Rauscher, Vice Chair
Representative Josiah Patkotak
Representative Kevin McCabe
Representative Stanley Wright
Representative Jennie Armstrong (via teleconference)
Representative Donna Mears
MEMBERS ABSENT
Representative Dan Saddler
Representative Maxine Dibert
COMMITTEE CALENDAR
HOUSE JOINT RESOLUTION NO. 6
Supporting oil and gas leasing and development within the
National Petroleum Reserve in Alaska; and urging President Biden
and the United States Department of the Interior to approve the
Willow Master Development Plan.
- MOVED CSHJR 6(RES) OUT OF COMMITTEE
HOUSE BILL NO. 50
"An Act relating to the geologic storage of carbon dioxide; and
providing for an effective date."
- HEARD & HELD
OVERVIEW: STATUS OF RESOURCE LITIGATION
- REMOVED FROM AGENDA
PREVIOUS COMMITTEE ACTION
BILL: HJR 6
SHORT TITLE: NAT'L PETROLEUM RESERVE IN ALASKA
SPONSOR(s): REPRESENTATIVE(s) PATKOTAK
02/10/23 (H) READ THE FIRST TIME - REFERRALS
02/10/23 (H) RES
02/17/23 (H) RES AT 1:00 PM BARNES 124
BILL: HB 50
SHORT TITLE: CARBON STORAGE
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/27/23 (H) READ THE FIRST TIME - REFERRALS
01/27/23 (H) RES, FIN
02/10/23 (H) RES AT 1:00 PM BARNES 124
02/10/23 (H) Heard & Held
02/10/23 (H) MINUTE(RES)
02/15/23 (H) RES AT 1:00 PM BARNES 124
02/15/23 (H) Heard & Held
02/15/23 (H) MINUTE(RES)
02/17/23 (H) RES AT 1:00 PM BARNES 124
WITNESS REGISTER
NAGRUK HARCHAREK, President
Voice of the Artic Inupiat
Anchorage, Alaska
POSITION STATEMENT: Provided invited testimony on HJR 6.
KARA MORIARTY, President, Lobbyist
Alaska Oil and Gas Association
Anchorage, Alaska
POSITION STATEMENT: Provided invited testimony on HJR 6.
ELAINE SCHROEDER, Member
350 Juneau Climate Action for Alaska
Juneau, Alaska
POSITION STATEMENT: Testified in opposition to HJR 6.
DOUG WOODBY, Member
350 Juneau Climate Action for Alaska
Juneau, Alaska
POSITION STATEMENT: Testified in opposition to HJR 6.
MIKE TOBIN, Member
350 Juneau Climate Action for Alaska
Juneau, Alaska
POSITION STATEMENT: Testified in opposition to HJR 6.
TRISTAN GLOWA, representing self
Fairbanks, Alaska
POSITION STATEMENT: Testified in opposition to HJR 6.
CHRISTI HEUN, representing self
Palmer, Alaska
POSITION STATEMENT: Testified in opposition to HJR 6.
LYNETTE PHAM, Campaign Coordinator and Executive Administrator
Sovereign Inupiaq for a Living Arctic
Fairbanks, Alaska
POSITION STATEMENT: Testified in opposition to HJR 6.
NICHOLE THAM, Operations Manager
Division of Community and Regional Affairs
Department of Commerce, Community, and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Was available for questions during the
hearing on HJR 6.
GUNNAR KEIZER, representing self
Ketchikan, Alaska
POSITION STATEMENT: Testified in opposition to HJR 6.
DYANI CHAPMAN, Director
Alaska Environment
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HJR 6.
BRITTANY WOODS-ORRISON, representing self
Rampart, Alaska
POSITION STATEMENT: Testified in opposition to HJR 6.
JOHN SUMAN, representing self
Douglas, Alaska
POSITION STATEMENT: Testified in opposition to HJR 6.
ROBIN MCGEE, representing self
Kenai, Alaska
POSITION STATEMENT: Testified in support of HJR 6.
NICK FULFORD, Senior Director
Gas and Energy Transition
Gaffney Cline
Houston, Texas
POSITION STATEMENT: On behalf of the sponsor, House Rules by
request of the governor, gave a PowerPoint presentation, titled
"CCUS Overview."
ACTION NARRATIVE
1:01:33 PM
CHAIR TOM MCKAY called the House Resources Standing Committee
meeting to order at 1:01 p.m. Representatives McCabe, Patkotak,
Rauscher, Wright, Armstrong, McKay, and Mears were present at
the call to order.
HJR 6-NAT'L PETROLEUM RESERVE IN ALASKA
1:02:50 PM
CHAIR MCKAY announced that the first order of business would be
HOUSE JOINT RESOLUTION NO. 6, Supporting oil and gas leasing and
development within the National Petroleum Reserve in Alaska; and
urging President Biden and the United States Department of the
Interior to approve the Willow Master Development Plan.
CHAIR MCKAY noted that a similar resolution, House Joint
Resolution 34, was passed during the Thirty-Second Alaska State
Legislature.
1:03:30 PM
REPRESENTATIVE PATKOTAK introduced HJR 6. He stated that the
resolution would support oil and gas development within the
National Petroleum Reserve in Alaska (NPRA), which is only in
the jurisdiction of the North Slope Burrough. He pointed out
that it would support the development of the Willow Master Plan.
Concerning the history of NPRA, as addressed in the resolution,
he pointed out that there has been a long history of a
relationship between the federal government and the North Slope.
As NPRA has been pursued commercially since 1976, he stated that
the resolution details what NPRA has provided for the state and
the nation. He then discussed the Willow Master Development
Plan.
1:05:52 PM
NAGRUK HARCHAREK, President, Voice of the Artic Inupiat ("the
Voice"), provided invited testimony on HJR 6. He expressed
support for HJR 6, on behalf of the Voice, which is a nonprofit
organization. He stated that the Voice was organized to give a
unified voice on subjects effecting the region, the communities,
the economy, and the culture. He gave a brief list of the
Voice's membership. He stated that the Voice passed a
resolution giving its support for the Willow Master Development
Plan, with the intention of moving it forward. He stated that
responsible resource development that engages the people on the
North Slope has been ongoing for 50 years, and this exemplifies
a positive model of cultural, ecological, and economic
interdependence. He maintained that the Inupiat know how to
best manage their lands. He expressed the opinion that resource
development and subsistence are not mutually exclusive. He
explained that the Inupiat have adapted technology to make
traditional and subsistence activities more efficient, and this
has also increased the health and safety of the people. He
expressed the opinion that embracing interdependence is
paramount to the longevity of the Inupiat culture. He stated
that the people understand that the project would be complex and
have effects, but it would also make it possible for the
continuation of their traditions, with economic independence for
years to come.
MR. HARCHAREK spoke about the North Slope Borough, as it levies
taxes on the oil and gas infrastructure to provide services to
the local communities. He stated that in other rural
communities the state and federal government would provide these
services. He stated that people in the North Slope Borough have
modern living conditions that most people take for granted, and
the community is accustomed to a modern economy. He argued that
this is supported by projects like Willow. He added that the
government protects the subsistence land and resources, and the
revenues from taxes have enhanced this. He maintained that the
project would continue to support the Inupiat way of life.
MR. HARCHAREK stated that the community is ready to start
construction on the Willow project now, and the only remaining
issue is for the federal government to advance the project. He
expressed the belief that there is unity across the region, as
without this the people would not still be in the region. He
maintained that support from the legislature would send a clear
message to the federal government that the people of the North
Slope are united in support of HJR 6.
1:11:51 PM
REPRESENTATIVE PATKOTAK clarified that the project does not have
unanimous consent from the North Slope communities, adding that
this is to be expected. He pointed out the mayor of Nuiqsut,
Dr. Rosemary Ahtuangaruak, has tirelessly advocated for those
that do not want any development. He expressed the importance
of this, as opposition forces developers to come to the table to
mitigate any impacts from the development. He discussed the
past when the oil and gas industry had rushed to develop the
North Slope. He pointed out that at that time the Indigenous
population had no way to have their voices heard, but because
the areas were designated as conservation areas, developers were
forced to mitigate this with the permitting process. During
this process, developers began coexisting with the local
population, and he gave the example of the improved local access
to traditional subsistence lands. He explained that this access
was needed and made by developers to advance projects.
1:15:54 PM
KARA MORIARTY, President and Lobbyist, Alaska Oil and Gas
Association (AOGA), provided invited testimony on HJR 6. She
expressed support of HJR 6, on behalf of AOGA. She stated that
AOGA represents the majority of the oil and gas companies in the
state. She stated that AOGA's mission is to advocate for long-
term viability because the oil and gas sector is the "single
most important economic driver in our state." She provided the
committee with statistics regarding economic benefits to the
North Slope Borough. She suggested that the Willow project
would generate thousands of jobs for the region. She shared a
personal account of how the economy from the oil and gas
industry has helped remote communities in the region.
MS. MORIARTY discussed the history of the National Petroleum
Preserve Alaska (NPRA) in the North Slope. She pointed out that
in 1980 the U.S. Congress directed NPRA be administered in a
responsible manner to increase the production of U.S. energy
reserves. She advised that the Willow project represents an
opportunity to meet the energy needs of the country while
benefiting the people of the North Slope. She suggested that
the project would create thousands of union jobs and an
estimated 180,000 barrels of oil a day, which would be a
significant increase. She pointed out that it is one of the
most studied projects in Alaska. She stated that the current
project has been studies since 2018, and since this time, the
project has been pared down by the U.S. Bureau of Land
Management (BLM) from five well sites to three. She discussed
the support, listing some of the organizations across the state
that are behind the project.
MS. MORIARTY pointed out that the official comment period on the
project has ended. She explained why the resolution is needed,
as the Department of Interior (DOI) is currently looking at
suggested alternative well locations that were made by BLM, and
the decision on these well locations could be issued as early as
March 6. She expressed the opinion that this alternative would
further reduce drill sites and "kill" the project. She
referenced the support for the project by Alaska's U.S. Congress
member, Representative Mary Peltola. She continued that it has
been acknowledged by BLM that if the barrels of oil are not
produced in Alaska, they will be "produced somewhere else," and
this production would not likely abide by the same environmental
protections. She suggested that at a time of global instability
and rising energy costs, the Willow project would be a "win" for
U.S. oil production, local residents, the workforce in the
state, tax revenues for state services, and for the environment.
1:22:50 PM
The committee took an at-ease from 1:22 p.m. to 1:23 p.m.
1:23:42 PM
CHAIR MCKAY opened public testimony on HJR 6.
1:24:16 PM
ELAINE SCHROEDER, Member, 350 Juneau Climate Action for Alaska,
testified in opposition to HJR 6. She shared with the committee
that there are net-zero federal mandates and global mandates.
She advised that a renewables revolution is needed, not a self-
destructive fossil-fuel resurgence. She stated that she is
calling for a resolution to oppose oil and gas leasing within
NPRA. She stated that this would urge the federal government to
deny the Willow Master Development Plan. She expressed the
opinion that with this plan Nuiqsut would be disproportionately
impacted, as it is already suffering from "extreme" pollution
from oil projects. She suggested that numerous organizations
and thousands of Alaskans oppose the project. She stated that
the federal government's analysis has found that developing this
would result in $19.8 billion in climate damages.
1:26:02 PM
DOUG WOODBY, Member, 350 Juneau Climate Action for Alaska,
testified in opposition to HJR 6. He expressed understanding of
the project's appeal; however, he asserted that the science is
clear and oil development is no longer responsible because of
its climate impact. He stated that it would not matter how
clean the oil operations are, the remaining known reserves of
fossil fuels must remain in the ground because of the amount of
carbon that would be released. He questioned any plans for
sustainable energy development in Alaska. He suggested that
Alaska is ready for this, but there needs to be leadership.
1:28:06 PM
MIKE TOBIN, Member, 350 Juneau Climate Action for Alaska,
testified in opposition to HJR 6. He stated that Conoco
Phillips products are toxic to the climate, locally and
worldwide. He suggested that the project would make global
heating worse. He stated that his top reason for opposition is
the Native communities in danger from rising seas [from climate
change]. He then referenced an article that expressed the
effect of rising seas. He listed other cities around the world
that are in danger from rising seas. He listed other effects of
climate change, including the loss of salmon, boreal forests,
and glaciers. He argued that a thirty-year commitment to fossil
energy would be taking Alaska in the wrong direction.
1:30:23 PM
TRISTAN GLOWA, representing self, testified in opposition to HJR
6. He expressed the opinion that the project would be a bad
idea fiscally, socially, and environmentally. He expressed the
understanding that the Alaska people are not asking for the
legislature to do the bidding for oil and gas corporate
executives. He explained the project would be going in the
wrong direction. He explained that from his involvement in the
community action in Fairbanks, he has heard from several
thousand people in Fairbanks who do not want further oil
development from the climate perspective alone, and he reasoned
that now is not the time to lock the state into several decades
of oil development. He argued that the economy of the state has
been created for the benefit of big corporations. He continued
that the economy of big corporations would not benefit the
residents of state in the end.
1:32:22 PM
CHRISTI HEUN, representing self, testified in opposition to HJR
6. She shared her background in wildlife biology, and she
expressed the opinion that Alaskans are pro-fish and pro-
caribou. She argued that the populations of caribou and
reindeer have been declining, mostly because of climate change.
She referred to Representative Mary Peltola's comment concerning
that the voices from Alaska need to be heard, as opposed to
those from out of state. She expressed support for an American
future for the population, but not one that would only benefit
oil and gas corporations. She stated that the Willow project
would be a win for its employees and the oil and gas industry,
but would be a loss for humans, animals, and habitat.
1:34:13 PM
LYNETTE PHAM, Campaign Coordinator and Executive Administrator,
Sovereign Inupiaq for a Living Arctic, testified in opposition
to HJR 6, on behalf of Sovereign Inupiaq for a Living Arctic.
She expressed the opinion that oil has been politicized within
communities; therefore, many Inupiaq feel unsafe voicing their
opposition, as they would risk alienation, denial of jobs, and
threats of violence. She stated Sovereign Inupiaq for a Living
Arctic opposes this development in traditional lands. She
suggested that the voices that have the most to lose should be
heard, and these are the voices of the people who do not have
high stakes in the oil and gas industry. She stated that the
project would only set the world back in the climate crisis.
She stated that BLM has related that this project would be
harmful to the people living in the area, and there comes a
point when the benefits of oil and gas do not outweigh the good
for communities.
1:35:56 PM
NICHOLE THAM, Operations Manager, Division of Community and
Regional Affairs, Department of Commerce, Community, and
Economic Development, stated that she was available for
questions concerning the NPRA grant that the commission
administers.
1:36:40 PM
GUNNAR KEIZER, representing self, testified in opposition to HJR
6 and the Willow project. He reasoned that continued oil
development would be devastating to the Indigenous people of the
land. He expressed the understanding that both the city and
village of Nuiqsut oppose the project, as this would be on their
traditional land. He referred to an open letter, which related
how BLM has treated the city. He stated that this letter was
what motivated his testimony. He related that the concerns of
the residents include air quality, traditional food resources,
and health problems. He argued that the state should not
continue to put these communities at risk, as there are other
avenues of revenue and power resources. He expressed support
for the Indigenous stewardship of ancestral lands.
1:38:30 PM
DYANI CHAPMAN, Director, Alaska Environment, testified in
opposition to HJR 6. She said that Alaska Environment is a
statewide, member-based organization, and it opposes the
resolution. She cited that because of climate change there have
been declines in the salmon population in the Yukon and the crab
population in the Bering Sea. She noted that villages have had
to be moved and declining sea ice has effected wildlife, and she
attributed this to oil development. She stated that for future
generations there should be no new drilling for oil and gas.
She advocated for overhauling the energy systems with renewable
energy projects, as "it is time for the next generation."
1:40:28 PM
BRITTANY WOODS-ORRISON, representing self, testified in
opposition to HJR 6. She expressed the opinion that Alaska can
no longer afford the climate change costs of oil production,
which has resulted in the Yukon River salmon and snow crab
collapse. She argued that the oil and gas industry developments
would not be safe for the local residents. She referred to
Conoco Phillips's well accident, and she expressed the opinion
that the industry is tied to missing and murdered Indigenous
women and girls. She argued that if the oil and gas industry
cannot acknowledge the costs to the people and the land, without
bringing solutions, it should not be allowed to have future
developments. She advocated for renewable projects, stating
that the priority should be the existing communities.
1:41:46 PM
JOHN SULEMAN, representing self, testified in opposition to HJR
6. He explained that the practices of the oil industry are
unsustainable. He argued that there should not be any further
destruction of the earth's hydrological cycle.
1:43:33 PM
ROBIN MCGEE, representing self, testified in support of HJR 6.
She shared that she has been a biologist for over 20 years,
working with environmental and regulatory compliance. She
reenforced the benefits of the Willow project discussed earlier
in the hearing. In addressing the comments on climate change,
she referred to the Environmental Impact Statement, which
related that the Willow project would equate to 0.3 percent of
the U.S. greenhouse gases by 2030. She argued that any energy
transition would still need new oil; therefore, a responsible
development like this project would play an essential role. She
suggested that those who oppose the resolution have
"sensationalized talking points," and this is in response to
campaigns by environmental activist. She advised that if the
oil is not produced in Alaska, it will be produced somewhere
else.
1:45:10 PM
CHAIR MCKAY, after ascertaining that there was no one else who
wished to testify, closed public testimony on HJR 6.
CHAIR MCKAY announced that HJR 6 was set aside [until later in
the meeting]. [The committee resumed the hearing on HJR 6 at
2:40 p.m.]
1:45:29 PM
The committee took an at-ease from 1:45 p.m. to 1:48 p.m.
HB 50-CARBON STORAGE
1:48:37 PM
CHAIR MCKAY announced that the next order of business would be
HB 50, "An Act relating to the geologic storage of carbon
dioxide; and providing for an effective date."
1:49:16 PM
NICK FULFORD, Senior Director, Gas and Energy Transition,
Gaffney Cline, on behalf of the sponsor, House Rules by request
of the governor, gave a PowerPoint presentation, titled "CCUS
Overview." He stated that he would be setting out the wider
considerations for carbon capture, storage, and utilization
(CCUS), especially the economic features that support these
types of technologies. He shared the experiences he has had
with CCUS projects worldwide. He stated that one important
question has always been: how to justify an investment of
billions of dollars in CCUS. He stated that he would be
explaining how this new sector is developing, where the profits
would be coming from, and how businesses would be created from
this technology.
MR. FULFORD addressed the major incentive strategies and
disincentive strategies used in implementing CCUS, as seen on
slide 4. He stated that the incentive strategies include
federal tax incentives, grants, and funding from the U.S.
Department of Energy, while disincentive strategies involve
penalizing industries, such as with a carbon tax for carbon
dioxide (CO2) emissions. He stated that HB 50 would not involve
any subsidies, assistance, or grants, but rather it would create
a framework for CCUS projects to leverage these strategies. He
stated that for incentive strategies, the taxpayer would be
paying, while disincentive strategies would be more of a direct
cost to the consumer. He pointed out that the projects often
involve the incentives and disincentives coming together. He
advised that implementing these CCUS projects often involve a
complicated system of stacking the benefits to create a highly
supportive revenue stream.
1:56:41 PM
REPRESENTATIVE MCCABE questioned how the 45(Q) federal tax
incentive would be for Alaska.
MR. FULFORD explained that the 45(Q) incentive has been
augmented in the Inflation Reduction Act. He explained that for
permanent sequestration of CO2 in Alaska, there would be a tax
credit of $85 per ton. He stated that it would be $50 a ton if
the CO2 was extended for recovery, which would be relevant in
Alaska. He stated that if a company operating a gas production
system in Alaska removes its own CO2, instead of venting the
gas, and it uses a geological sequestration site, a 45(Q) tax
credit could be used for a period of time. He added that for a
gas project that connects the CO2 to a pipeline, there would
also be a tax credit of $85. He advised that this would be a
significant financial incentive. Considering all the natural
gas resources on the North Slope, he suggested that the CO2
could be removed before the gas leaves Alaska, and this would be
a low carbon product.
2:00:14 PM
REPRESENTATIVE MCCABE asked whether companies could leverage the
federal 45(Q) tax credit to reduce its Alaska corporate tax.
MR. FULFORD responded that he is not a tax expert. He stated
that most of the storage projects are very complex, and to
collect the maximum benefit there would need to be a complex tax
partnership. He stated that with the 45(Q) it might be possible
to reassign the tax credit to other parts of the supply chain.
2:02:36 PM
MR. FULFORD moved to slide 5, to address the question why
governments would invest in projects that do not seem to have an
inherent product. He explained that some companies rely on
economies with hydrocarbon exports, like in Alaska. He stated
that a major goal for a hydrocarbon-based fuel economy would be
the ability to compete with renewable and low carbon energy;
this can be achieved by having a premium fuel or having a
strategy to deal with the emissions, like one that attracts
"green" financing. He also discussed the possibility of having
an import/export market, as Alaska's huge storage resources
could be matched with a country where the opposite is true.
MR. FULFORD moved to slide 6, which showed a map of the world,
and what solutions countries are adopting concerning carbon
pricing, which would be a carbon tax, an emission trading
system, or a combination of both. He noted that the countries
using a cap-and-trade system have an estimated value close to
that of the 45(Q) tax credit. However, he explained that when
considering the cost involved for CCUS, there would be a gap
between the revenue stream and what is needed to create a
sustainable investment.
2:09:00 PM
MR. FULFORD continued with slide 7, which addressed policy
options to incentivize CCUS deployment. He discussed several
methods for bridging the gap between economic viability and the
revenue system. Addressing capitol, he stated that one method
would be to apply direct grants to build projects. He added
that other methods would include using an investment tax credit
and using accelerated depreciation. He stated that on the
revenue side, production tax credits could be used, as with the
45(Q) tax incentive. He pointed out that other revenue methods
include direct payment methods and research and development. He
suggested that there are "pools of money" Alaska could access.
He added that the introduction of subsidies here has not been
considered.
MR. FULFORD moved to slide 8, which showed an overview of the
cost of CO2 capture, transport, and storage. He suggested that
this slide would also help explain the gap between cost and
revenue for CCSU projects. He explained that capture is the
most complex and costliest part of the process. The graph on
the slide compared the cost and effectiveness of the methods of
carbon capture, along with the cost for transportation. He also
addressed the cost of CO2 storage.
2:16:03 PM
MR. FULFORD advanced to slide 9 and provided examples of markets
with carbon capture projects around the world. He stated that
closing the gap between economic viability and the revenue
stream, while creating an incentive for CCUS, would be more
challenging for some markets than others. The graphs on the
slide compared these markets, and he suggested that Norway's
market would be a good example for Alaska. He proceeded with
slide 10, explaining the variables in the addressable markets,
and compared this with the potential market. From the
projection on the graph, he expressed the understanding that the
price for CO2 would be going up. He suggested that as
efficiencies and technologies become better in the future, the
cost curve for CCUS would come down. With this and the cost of
CO2 rising, he expressed the expectation that carbon capture
would emerge as a sustainable market in the future. He stated
that the remaining question would be the extent of the
timeframe.
2:22:12 PM
REPRESENTATIVE MEARS asked whether the increase of economic
projects would create more market opportunities.
MR. FULFORD responded in the affirmative. He expressed the
opinion that the number of entities looking for CO2
sequestration in Alaska would increase, especially concerning
the natural gas (LNG) market.
REPRESENTATIVE MEARS asked whether the CCUS market would follow
a typical supply and demand model. If so, she questioned
whether the price Alaska would be able to demand would increase
over time.
MR. FULFORD commented that an ever-increasing value has been
placed on carbon capture over the last ten years. He stated
that currently there is not a global market place to set the
price, but there are several international mechanisms settling
on $80 to $100 a ton, which is sufficient to attract investors.
He expressed the expectation that the factors would align in the
future and a sustainable market in carbon capture would emerge.
2:25:33 PM
MR. FULFORD continued to slide 11, which showed a comparison of
global oil and gas markets with mitigation and without
mitigation from CCUS. He suggested that global deployment of
CCUS could substantially alter the energy mix by 2050. He
pointed out that higher carbon oil would be replaced with lower
carbon products. He continued that there would be a growth in
LNG production, while renewables would become more effective
with technology. He suggested that CCUS growth is likely to
coincide with natural gas exports from the state, which could
potentially become important. He stated that Alaska's
significant natural gas resource could be enhanced by the
combination with CCUS.
2:29:00 PM
CHAIR MCKAY expressed optimism concerning the information
presented. He suggested that this optimism is hinged on the
45(G) tax credits. He asked what would happen if the federal
administration changed this and the tax credits go away.
MR. FULFORD expressed the importance of the question. He stated
that some investors have acknowledged that any significant
investment of capital resting on federal tax subsidies would be
risky. He recommended that the "jury is out" on whether 45(Q)
would be a sustainable mechanism. He reasoned that for some of
the smaller projects, the risks would be lower because they
would be operational very soon; however, for a larger, more
strategic venture, the availability of 45(Q) would be a
consideration. He suggested that 45(Q), and this type of
funding, would disappear when a sustainable market evolves.
CHAIR MCKAY pointed out that oil projects are regularly "stress
tested" or analyzed to see what the economics are at certain
per-barrel dollars. He suggested that the carbon capture
projects should be analyzed in a similar manner.
MR. FULFORD responded with an example from the Gulf Coast LNG
exporters. Because of the carbon intensity of the U.S. natural
gas, pressure from the European and Asian markets caused many
U.S. companies to de-carbonize their products, and from this the
infrastructure of the LNG production evolved, with the result
being a more valuable product. He stated that having a cleaner
product had increased the market. Per this example, he reasoned
that if the 45(Q) disappears, these projects would still be
economically viable.
2:34:15 PM
REPRESENTATIVE MEARS asked whether a company relying on carbon
tax credits would be denied a loan or not receive any
investments.
MR. FULFORD expressed the understanding that many lenders who
invest in a project that involves government grants would
consider this; however, from his 40 years of experience, he
expressed surprise by the number of lenders willing to fund
companies interested in CCUS.
2:37:37 PM
MR. FULFORD continued his presentation with slide 12, which
showed worldwide press clippings that supported the development
of carbon-neutral LNG; thus, promoting CCUS projects.
[HB 50 was set aside and the hearing on the bill was resumed at
2:49 p.m.]
2:39:07 PM
The committee took an at-ease from 2:39 p.m. to 2:40 p.m.
HJR 6-NAT'L PETROLEUM RESERVE IN ALASKA
2:40:42 PM
CHAIR MCKAY announced that the next order of business would be a
return to HOUSE JOINT RESOLUTION NO. 6, Supporting oil and gas
leasing and development within the National Petroleum Reserve in
Alaska; and urging President Biden and the United States
Department of the Interior to approve the Willow Master
Development Plan.
2:41:18 PM
REPRESENTATIVE MEARS moved to adopt Amendment 1 to HJR 6,
labeled, 33-LS0415\B.5, Nauman, 2/15/23, which read as follows:
Page 2, following line 25:
Insert a new clause to read:
"WHEREAS the Inupiat people are the first and
rightful stewards of the land on which the National
Petroleum Reserve in Alaska sits, and take seriously
the need for careful and balanced stewardship; and"
Page 3, line 27, following "populations;":
Insert "and
WHEREAS the state's leadership in the nation's
energy future includes robust support for the
development and implementation of renewable energy
systems and sources to ensure that cost-effective
energy and power are provided to communities and
individuals in the state; and
WHEREAS responsible resource development today
equips communities in the state to make investments in
technology and infrastructure to support the use of
renewable sources of energy and power; and
WHEREAS the Willow project is an important part
of a diverse energy future for the state and the
nation;"
2:41:24 PM
CHAIR MCKAY objected for the purpose of discussion.
REPRESENTATIVE MEARS explained that Amendment 1 would address
some of the concerns of the public testifiers. She stated that
the amendment would add a broader context of Alaska's energy
future, and this would include leadership and the implementation
of renewable energy systems and sources.
2:42:14 PM
CHAIR MCKAY removed his objection. There being no further
objection, Amendment 1 to HJR 6 was adopted.
2:42:36 PM
REPRESENTATIVE PATKOTAK, in regard to HJR 6, [as amended],
expressed the importance of several issues. First, he stated
that the federal government must hold consultations with the
five villages affected by the proposed project. In relation to
the traditional values of taking care of one another, he stated
that services would need to be provided for these communities,
and this would be addressed by the property tax assessment for
the project. He stated that the North Slope Borough would
provide these services to the residents in the region, and he
listed some of these services. He stated that the villages in
the area have relied on a diesel generator for power, and he
pointed out that now natural gas is being piped in for heat in
Nuiqsit, and its cost is around $25 a month. He added that it
had been around $700 a month for diesel. He expressed
appreciation for the unified voice the committee has provided.
He expressed the importance of balancing the ecology of the
North Slope, as the marine life and animals of the land are
affected by these types of projects, and this concerns food
security and traditional lifestyles.
2:47:07 PM
REPRESENTATIVE RAUSCHER moved to report HJR 6, as amended, out
of the committee with individual recommendations and attached
zero fiscal note. There being no objection, CSHJR 6(RES) was
reported out of the House Resources Standing Committee.
2:47:50 PM
The committee took a brief at-ease from 2:47 p.m. to 2:49 p.m.
HB 50-CARBON STORAGE
2:49:10 PM
CHAIR MCKAY announced that the final order of business would be
a return to HOUSE BILL NO. 50, "An Act relating to the geologic
storage of carbon dioxide; and providing for an effective date."
[The presentation and discussion had been recessed at 2:39 p.m.]
2:49:31 PM
NICK FULFORD returned to the presentation and the remainder of
the slides, which gave examples of CCUS projects around the
world. He stated that this shows the different legislative and
regulatory ways these projects have been facilitated. He stated
that slide 16 compares the beginnings of the LNG sector with the
CCUS industry. He pointed out Alaska's significance as one of
the first exporters of LNG. He suggested that the CCUS industry
is in its initial stages and "everybody is in the same boat,"
and if anything in the value chain fails, everyone is affected.
He suggested that this is helping to create a sustainable
business model.
2:52:06 PM
MR. FULFORD moved back to slide 15, titled "CCS Value Chain
Value Driver and Risks." He suggested that this is a helpful
summary of the risks and opportunities in each part of the value
chain. Referencing the first part of the value chain, he
reiterated that capturing CO2 is complex. He stated that the
best scenarios would involve facilities that are able to capture
carbon themselves, as there is not a "one size fits all" way of
doing this. In the next part of the chain, he discussed the
aggregation and temporary storage of carbon. In relation to
transporting carbon, he stated that this would be a simple
process. He addressed the final part of the chain, which is the
carbon sequestration. He pointed out the geological risks of
this, as CO2 "moves in very strange ways;" however, he observed
that it would be an efficient fluid to store. He stated that
some of the investors who are cautious about funding are also
cautious about the storage technology, as CO2 could be
unintentionally released. He suggested that the bond market is
becoming involved with CCUS, as insurers are becoming more
interested. He ended by saying investment has been increasing,
and this would lower the risks.
2:57:46 PM
CHAIR MCKAY announced that HB 50 was held over.
2:58:08 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 2:58 p.m.