Legislature(2007 - 2008)SENATE FINANCE 532

07/28/2008 02:00 PM Senate SENATE SPECIAL COMMITTEE ON ENERGY


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Audio Topic
02:37:20 PM Start
02:38:42 PM SB3001|| HB3001
04:27:44 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB3001 APPROVING AGIA LICENSE TELECONFERENCED
Heard & Held
+= HB3001 APPROVING AGIA LICENSE TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
                    ALASKA STATE LEGISLATURE                                                                                  
               SENATE SPECIAL COMMITTEE ON ENERGY                                                                             
                         July 28, 2008                                                                                          
                           2:37 p.m.                                                                                            
                                                                                                                              
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Charlie Huggins, Chair                                                                                                  
Senator Bert Stedman, Vice Chair                                                                                                
Senator Kim Elton                                                                                                               
Senator Lyda Green                                                                                                              
Senator Lesil McGuire                                                                                                           
Senator Gary Stevens                                                                                                            
Senator Joe Thomas                                                                                                              
Senator Bill Wielechowski                                                                                                       
Senator Fred Dyson                                                                                                              
Senator Thomas Wagoner                                                                                                          
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Lyman Hoffman                                                                                                           
Senator Donald Olson                                                                                                            
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Representative Jay Ramras                                                                                                       
Representative Bryce Edgmon                                                                                                     
Representative Andrea Doll                                                                                                      
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 3001                                                                                                            
"An Act  approving issuance of  a license by the  commissioner of                                                               
revenue and the commissioner of  natural resources to TransCanada                                                               
Alaska Company,  LLC and  Foothills Pipe  Lines Ltd.,  jointly as                                                               
licensee, under the Alaska Gasline  Inducement Act; and providing                                                               
for an effective date."                                                                                                         
     HEARD AND HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 3001(efd fld)                                                                                                    
"An Act  approving issuance of  a license by the  commissioner of                                                               
revenue and the commissioner of  natural resources to TransCanada                                                               
Alaska Company,  LLC and  Foothills Pipe  Lines Ltd.,  jointly as                                                               
licensee, under the Alaska Gasline Inducement Act."                                                                             
     HEARD AND HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB3001                                                                                                                  
SHORT TITLE: APPROVING AGIA LICENSE                                                                                             
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
06/03/08       (S)       READ THE FIRST TIME - REFERRALS                                                                        
06/03/08       (S)       ENR                                                                                                    
06/03/08       (S)       REPORT ON FINDINGS AND DETERMINATION                                                                   
06/04/08       (S)       ENR AT 10:00 AM TERRY MILLER GYM                                                                       
06/04/08       (S)       Heard & Held                                                                                           
06/04/08       (S)       MINUTE(ENR)                                                                                            
06/05/08       (S)       ENR AT 9:00 AM TERRY MILLER GYM                                                                        
06/05/08       (S)       Heard & Held                                                                                           
06/05/08       (S)       MINUTE(ENR)                                                                                            
06/06/08       (S)       ENR AT 10:00 AM TERRY MILLER GYM                                                                       
06/06/08       (S)       Heard & Held                                                                                           
06/06/08       (S)       MINUTE(ENR)                                                                                            
06/07/08       (S)       ENR AT 10:00 AM TERRY MILLER GYM                                                                       
06/07/08       (S)       Heard & Held                                                                                           
06/07/08       (S)       MINUTE(ENR)                                                                                            
06/08/08       (S)       ENR AT 1:00 PM TERRY MILLER GYM                                                                        
06/08/08       (S)       Heard & Held                                                                                           
06/08/08       (S)       MINUTE(ENR)                                                                                            
06/09/08       (S)       ENR AT 10:00 AM TERRY MILLER GYM                                                                       
06/09/08       (S)       Heard & Held                                                                                           
06/09/08       (S)       MINUTE(ENR)                                                                                            
06/10/08       (S)       ENR AT 10:00 AM TERRY MILLER GYM                                                                       
06/10/08       (S)       Heard & Held                                                                                           
06/10/08       (S)       MINUTE(ENR)                                                                                            
06/12/08       (S)       ENR AT 10:00 AM FBX Carlson Center                                                                     
06/12/08       (S)       Heard & Held                                                                                           
06/12/08       (S)       MINUTE(ENR)                                                                                            
06/13/08       (S)       ENR AT 10:00 AM FBX Carlson Center                                                                     
06/13/08       (S)       Heard & Held                                                                                           
06/13/08       (S)       MINUTE(ENR)                                                                                            
06/14/08       (S)       ENR AT 10:00 AM FBX Carlson Center                                                                     
06/14/08       (S)       Heard & Held                                                                                           
06/14/08       (S)       MINUTE(ENR)                                                                                            
06/16/08       (S)       ENR AT 9:00 AM ANCHORAGE                                                                               
06/16/08       (S)       Heard & Held                                                                                           
06/16/08       (S)       MINUTE(ENR)                                                                                            
06/17/08       (S)       ENR AT 9:00 AM ANCHORAGE                                                                               
06/17/08       (S)       Heard & Held                                                                                           
06/17/08       (S)       MINUTE(ENR)                                                                                            
06/18/08       (S)       ENR AT 9:00 AM ANCHORAGE                                                                               
06/18/08       (S)       Heard & Held                                                                                           
06/18/08       (S)       MINUTE(ENR)                                                                                            
06/19/08       (S)       ENR AT 9:00 AM ANCHORAGE                                                                               
06/19/08       (S)       Heard & Held                                                                                           
06/19/08       (S)       MINUTE(ENR)                                                                                            
06/20/08       (S)       ENR AT 9:00 AM ANCHORAGE                                                                               
06/20/08       (S)       Heard & Held                                                                                           
06/20/08       (S)       MINUTE(ENR)                                                                                            
06/24/08       (S)       ENR AT 1:00 PM MAT-SU                                                                                  
06/24/08       (S)       Heard & Held                                                                                           
06/24/08       (S)       MINUTE(ENR)                                                                                            
06/26/08       (S)       ENR AT 1:00 PM KENAI                                                                                   
06/26/08       (S)       Heard & Held                                                                                           
06/26/08       (S)       MINUTE(ENR)                                                                                            
07/01/08       (S)       BILL CARRIES OVER FROM 3RD SPECIAL                                                                     
                         SESSION                                                                                                
07/01/08       (S)       ENR AT 9:00 AM BARROW                                                                                  
07/01/08       (S)       Heard & Held                                                                                           
07/01/08       (S)       MINUTE(ENR)                                                                                            
07/08/08       (S)       ENR AT 1:00 PM KETCHIKAN                                                                               
07/08/08       (S)       Heard & Held                                                                                           
07/08/08       (S)       MINUTE(ENR)                                                                                            
07/09/08       (S)       ENR AT 1:30 PM TERRY MILLER GYM                                                                        
07/09/08       (S)       Heard & Held                                                                                           
07/09/08       (S)       MINUTE(ENR)                                                                                            
07/10/08       (S)       ENR AT 8:00 AM TERRY MILLER GYM                                                                        
07/10/08       (S)       Heard & Held                                                                                           
07/10/08       (S)       MINUTE(ENR)                                                                                            
07/11/08       (S)       ENR AT 9:00 AM TERRY MILLER GYM                                                                        
07/11/08       (S)       Heard & Held                                                                                           
07/11/08       (S)       MINUTE(ENR)                                                                                            
07/12/08       (S)       ENR AT 9:00 AM TERRY MILLER GYM                                                                        
07/12/08       (S)       Heard & Held                                                                                           
07/12/08       (S)       MINUTE(ENR)                                                                                            
07/13/08       (S)       ENR AT 12:30 AM TERRY MILLER GYM                                                                       
07/13/08       (S)       Heard & Held                                                                                           
07/13/08       (S)       MINUTE(ENR)                                                                                            
07/14/08       (S)       ENR AT 9:00 AM TERRY MILLER GYM                                                                        
07/14/08       (S)       Heard & Held                                                                                           
07/14/08       (S)       MINUTE(ENR)                                                                                            
07/22/08       (S)       ENR AT 1:00 PM SENATE FINANCE 532                                                                      
07/22/08       (S)       Heard & Held                                                                                           
07/22/08       (S)       MINUTE(ENR)                                                                                            
07/23/08       (S)       ENR AT 1:00 PM SENATE FINANCE 532                                                                      
07/23/08       (S)       Heard & Held                                                                                           
07/23/08       (S)       MINUTE(ENR)                                                                                            
07/24/08       (S)       ENR AT 2:00 PM SENATE FINANCE 532                                                                      
07/24/08       (S)       -- MEETING CANCELED --                                                                                 
07/25/08       (S)       ENR AT 1:30 PM SENATE FINANCE 532                                                                      
07/25/08       (S)       Heard & Held                                                                                           
07/25/08       (S)       MINUTE(ENR)                                                                                            
07/28/08       (S)       ENR AT 2:00 PM SENATE FINANCE 532                                                                      
                                                                                                                                
BILL: HB3001                                                                                                                  
SHORT TITLE: APPROVING AGIA LICENSE                                                                                             
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
06/03/08       (H)       READ THE FIRST TIME - REFERRALS                                                                        
06/03/08       (H)       RLS                                                                                                    
06/03/08       (H)       WRITTEN FINDINGS & DETERMINATION                                                                       
06/04/08       (H)       RLS AT 9:00 AM CAPITOL 120                                                                             
06/04/08       (H)       Subcommittee Assigned                                                                                  
06/04/08       (H)       RLS AT 10:00 AM TERRY MILLER GYM                                                                       
06/04/08       (H)       Heard & Held                                                                                           
06/04/08       (H)       MINUTE(RLS)                                                                                            
06/05/08       (H)       RLS AT 9:00 AM TERRY MILLER GYM                                                                        
06/05/08       (H)       Heard & Held                                                                                           
06/05/08       (H)       MINUTE(RLS)                                                                                            
06/06/08       (H)       RLS AT 10:00 AM TERRY MILLER GYM                                                                       
06/06/08       (H)       Heard & Held                                                                                           
06/06/08       (H)       MINUTE(RLS)                                                                                            
06/07/08       (H)       RLS AT 10:00 AM TERRY MILLER GYM                                                                       
06/07/08       (H)       Heard & Held                                                                                           
06/07/08       (H)       MINUTE(RLS)                                                                                            
06/08/08       (H)       RLS AT 1:00 PM TERRY MILLER GYM                                                                        
06/08/08       (H)       Heard & Held                                                                                           
06/08/08       (H)       MINUTE(RLS)                                                                                            
06/09/08       (H)       RLS AT 10:00 AM TERRY MILLER GYM                                                                       
06/09/08       (H)       Heard & Held                                                                                           
06/09/08       (H)       MINUTE(RLS)                                                                                            
06/10/08       (H)       RLS AT 10:00 AM TERRY MILLER GYM                                                                       
06/10/08       (H)       Heard & Held                                                                                           
06/10/08       (H)       MINUTE(RLS)                                                                                            
06/12/08       (H)       RLS AT 10:00 AM FBX CARLSON CENTER                                                                     
06/12/08       (H)       Heard & Held                                                                                           
06/12/08       (H)       MINUTE(RLS)                                                                                            
06/13/08       (H)       RLS AT 10:00 AM FBX CARLSON CENTER                                                                     
06/13/08       (H)       Heard & Held                                                                                           
06/13/08       (H)       MINUTE(RLS)                                                                                            
06/14/08       (H)       RLS AT 10:00 AM FBX CARLSON CENTER                                                                     
06/14/08       (H)       Heard & Held                                                                                           
06/14/08       (H)       MINUTE(RLS)                                                                                            
06/16/08       (H)       RLS AT 9:00 AM ANCHORAGE                                                                               
06/16/08       (H)       Heard & Held                                                                                           
06/16/08       (H)       MINUTE(RLS)                                                                                            
06/17/08       (H)       RLS AT 9:00 AM ANCHORAGE                                                                               
06/17/08       (H)       Heard & Held                                                                                           
06/17/08       (H)       MINUTE(RLS)                                                                                            
06/18/08       (H)       RLS AT 9:00 AM ANCHORAGE                                                                               
06/18/08       (H)       Heard & Held                                                                                           
06/18/08       (H)       MINUTE(RLS)                                                                                            
06/19/08       (H)       RLS AT 9:00 AM ANCHORAGE                                                                               
06/19/08       (H)       Heard & Held                                                                                           
06/19/08       (H)       MINUTE(RLS)                                                                                            
06/20/08       (H)       RLS AT 9:00 AM ANCHORAGE                                                                               
06/20/08       (H)       Heard & Held                                                                                           
06/20/08       (H)       MINUTE(RLS)                                                                                            
06/24/08       (H)       RLS AT 1:00 PM MAT-SU                                                                                  
06/24/08       (H)       Heard & Held                                                                                           
06/24/08       (H)       MINUTE(RLS)                                                                                            
06/26/08       (H)       RLS AT 1:00 PM KENAI                                                                                   
06/26/08       (H)       Heard & Held                                                                                           
06/26/08       (H)       MINUTE(RLS)                                                                                            
07/01/08       (H)       RLS AT 9:00 AM BARROW                                                                                  
07/01/08       (H)       Heard & Held                                                                                           
07/01/08       (H)       MINUTE(RLS)                                                                                            
07/02/08       (H)       BILL CARRIES OVER TO FOURTH SPECIAL                                                                    
                         SESSION                                                                                                
07/08/08       (H)       RLS AT 1:00 PM KETCHIKAN                                                                               
07/08/08       (H)       Heard & Held                                                                                           
07/08/08       (H)       MINUTE(RLS)                                                                                            
07/09/08       (H)       RLS AT 1:30 PM TERRY MILLER GYM                                                                        
07/09/08       (H)       Heard & Held                                                                                           
07/09/08       (H)       MINUTE(RLS)                                                                                            
07/10/08       (H)       RLS AT 8:00 AM TERRY MILLER GYM                                                                        
07/10/08       (H)       Heard & Held                                                                                           
07/10/08       (H)       MINUTE(RLS)                                                                                            
07/11/08       (H)       RLS AT 9:00 AM TERRY MILLER GYM                                                                        
07/11/08       (H)       Heard & Held                                                                                           
07/11/08       (H)       MINUTE(RLS)                                                                                            
07/12/08       (H)       RLS AT 9:00 AM TERRY MILLER GYM                                                                        
07/12/08       (H)       Heard & Held                                                                                           
07/12/08       (H)       MINUTE(RLS)                                                                                            
07/13/08       (H)       RLS AT 12:30 AM TERRY MILLER GYM                                                                       
07/13/08       (H)       Heard & Held                                                                                           
07/13/08       (H)       MINUTE(RLS)                                                                                            
07/14/08       (H)       RLS AT 9:00 AM TERRY MILLER GYM                                                                        
07/14/08       (H)       Heard & Held                                                                                           
07/14/08       (H)       MINUTE(RLS)                                                                                            
07/15/08       (H)       RLS AT 9:00 AM CAPITOL 120                                                                             
07/15/08       (H)       -- MEETING CANCELED --                                                                                 
07/21/08       (H)       RLS AT 2:00 PM CAPITOL 120                                                                             
07/21/08       (H)       Moved Out of Committee                                                                                 
07/21/08       (H)       MINUTE(RLS)                                                                                            
07/21/08       (H)       RLS RPT 3DP 4DNP                                                                                       
07/21/08       (H)       DP: KERTTULA, GUTTENBERG, COGHILL                                                                      
07/21/08       (H)       DNP:   JOHNSON,   FAIRCLOUGH,   SAMUELS,                                                               
                         HARRIS                                                                                                 
07/22/08       (H)       BEFORE THE HOUSE IN THIRD READING                                                                      
07/22/08       (S)       ENR AT 1:00 PM SENATE FINANCE 532                                                                      
07/22/08       (S)       <Pending Referral>                                                                                     
07/23/08       (H)       TRANSMITTED TO (S)                                                                                     
07/23/08       (H)       VERSION: HB 3001(EFD FLD)                                                                              
07/23/08       (S)       ENR AT 1:00 PM SENATE FINANCE 532                                                                      
07/23/08       (S)       <Pending Referral>                                                                                     
07/24/08       (S)       READ THE FIRST TIME - REFERRALS                                                                        
07/24/08       (S)       ENR                                                                                                    
07/24/08       (S)       ENR AT 2:00 PM SENATE FINANCE 532                                                                      
07/24/08       (S)       -- MEETING CANCELED --                                                                                 
07/25/08       (S)       ENR AT 1:30 PM SENATE FINANCE 532                                                                      
07/25/08       (S)       Heard & Held                                                                                           
07/25/08       (S)       MINUTE(ENR)                                                                                            
07/28/08       (S)       ENR AT 2:00 PM SENATE FINANCE 532                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Governor Walter J. Hickel                                                                                                       
POSITION  STATEMENT:   During hearing  on  SB 3001  and HB  3001,                                                             
opposed license to TransCanada and supported an all-Alaska line.                                                                
                                                                                                                                
Governor Tony Knowles                                                                                                           
POSITION  STATEMENT:    Expressed   concerns  about  AGIA  during                                                             
hearing on SB 3001 and HB 3001, proposing alternatives.                                                                         
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR  CHARLIE HUGGINS  called the  Senate  Special Committee  on                                                             
Energy meeting  to order at 2:37:20  PM.  Present at  the call to                                                             
order   were  Senators   Green,  Elton,   Wagoner,  Wielechowski,                                                               
Stevens, Stedman,  and Chair Huggins;  Senators Dyson  and Thomas                                                               
arrived  shortly  thereafter,  and  Senator  McGuire  joined  the                                                               
meeting  in progress.   Also  in attendance  were Representatives                                                               
Jay Ramras, Bryce Edgmon, and Andrea Doll.                                                                                      
                 SB3001-APPROVING AGIA LICENSE                                                                              
                 HB3001-APPROVING AGIA LICENSE                                                                              
                                                                                                                                
CHAIR HUGGINS  brought SB 3001  and HB 3001 before  the committee                                                               
for  consideration.    He welcomed  former  governors  Walter  J.                                                               
Hickel and Tony  Knowles.  Chair Huggins  invited Governor Hickel                                                               
to testify first, noting he'd  been governor twice, had been U.S.                                                               
Secretary of  the Interior,  and had recently  gone with  him and                                                               
other Alaskans to China.                                                                                                        
                                                                                                                                
2:38:42 PM                                                                                                                    
GOVERNOR WALTER J. HICKEL testified as follows:                                                                                 
                                                                                                                                
     There  is an  issue  before you  of giant  proportions.                                                                    
     This  is  the most  important  vote  you'll ever  cast.                                                                    
     You'll   decide   whether    the   State   of   Alaska,                                                                    
     representing  all   our  people,  the  owners   of  our                                                                    
     resources  won  in  our battle  for  statehood,  should                                                                    
     build  a  natural  gas pipeline  from  Prudhoe  Bay  to                                                                    
     Valdez, or  whether you approve a  Canadian corporation                                                                    
     to control this resource,  set the timetable, determine                                                                    
     who gets  the jobs and  other benefits promised  to the                                                                    
     Alaska people in our Constitution.                                                                                         
                                                                                                                                
     Don't sell  us out.   Remember who  you are.   Remember                                                                    
     where you  are.   This is  Alaska.   And don't  sell us                                                                    
     out.   Ask yourself what  is best  for Alaska.   If you                                                                    
     do, you'll vote  no on the TransCanada  license and you                                                                    
     will say yes on an all-Alaska gas line.                                                                                    
                                                                                                                                
     Your vote can have an  immediate and positive impact on                                                                    
     our economy and  our future.  We can  get Alaska moving                                                                    
     again.    We  can  lead the  nation  with  an  economic                                                                    
     turnaround  badly needed  in the  South 48,  49.   Your                                                                    
     vote can  begin a new  era - not  an era of  giving out                                                                    
     money.  Giving  out money does not save a  society.  It                                                                    
     corrupts it.                                                                                                               
                                                                                                                                
     The  pluses   of  an  all-Alaskan  line:     While  the                                                                    
     TransCanada  plan means  loss  of  control and  serious                                                                    
     delay, an  all-Alaska gas  line owned  by the  State of                                                                    
     Alaska means the  opposite.  It means  that Alaska will                                                                    
     retain control  of our  resources and  our future.   It                                                                    
     means that  there will be  absolutely no risk  that any                                                                    
     one corporation  or group of corporations  will control                                                                    
     us.                                                                                                                        
                                                                                                                                
     While TransCanada  readily admits that they  won't even                                                                    
     start building  a gas  line until the  end of  the next                                                                    
     decade,  and  Canadian  pipelines are  well  known  for                                                                    
     their delay, we can start  the all-Alaska gas line this                                                                    
     year.   It will  give us access  to the  most lucrative                                                                    
     markets  in  the world.    Alaska's  natural market  is                                                                    
     Asia, and we  can provide all the gas they  need to the                                                                    
     U.S.  West  Coast.   We  have  before us  the  greatest                                                                    
     opportunity in my  lifetime and yours.  And  if we stop                                                                    
     acting  like a  fearful  colony and  stand  up for  our                                                                    
     rights, we will have all the export licenses we need.                                                                      
                                                                                                                                
2:42:35 PM                                                                                                                    
GOVERNOR HICKEL continued:                                                                                                      
                                                                                                                                
     In 1989,  I helped  obtain a presidential  finding from                                                                    
     President Ronald  Reagan, an export license  for Alaska                                                                    
     LNG that is valid for 25  years from the sailing of the                                                                    
     first  LNG tanker.   If  called  on to  assist, I  look                                                                    
     forward to help renew and  expand that license.  All it                                                                    
     takes is  someone who  knows our  constitutional rights                                                                    
     and isn't  afraid to  go to  the top  to fight  ... for                                                                    
     them.                                                                                                                      
                                                                                                                                
     And keep in  mind, the anti-Asia mood  in Congress will                                                                    
     change once the  South 48 is awash in  the 500 trillion                                                                    
     cubic feet of gas that will  soon come on line.  I know                                                                    
     about these gas resources.   I tried to kick-start them                                                                    
     in 1970  as Interior Secretary.   When that  gas floods                                                                    
     America,  Congress will  welcome Alaska  coming to  the                                                                    
     rescue and saving our nation  from our ... imbalance of                                                                    
     trade and the economic giants of Asia. ...                                                                                 
                                                                                                                                
     Who will  control our gas  under the  TransCanada plan?                                                                    
     Not TransCanada.   It  will be the  producers.   No one                                                                    
     but the  State of  Alaska, the  owner of  the resource,                                                                    
     can force  the producers to  use the gas  they control.                                                                    
     That's why  TransCanada has offered  to give  up equity                                                                    
     ownership in their gas line  in exchange for producers'                                                                    
     gas.    The  end  of  this process  is  obvious.    The                                                                    
     producers will control the line through Canada.                                                                            
                                                                                                                                
     In addition,  the TransCanada plan  will mean  that the                                                                    
     Canadian government  will determine when a  gas line is                                                                    
     built, how it  is regulated, how much it  is taxed, how                                                                    
     it  addresses  environmental   issues,  and  the  First                                                                    
     Nations  land claims.   And  when they  negotiate these                                                                    
     issues, depending how generous  they are, there will be                                                                    
     less revenue for the Alaska  people because we will pay                                                                    
     the bill.                                                                                                                  
                                                                                                                                
     What  are the  Canadians telling  their people?   Visit                                                                    
     the  TransCanada  website  and  look  up  the  Northern                                                                    
     Pipeline Act of  1978.  Here's what it says:   This Act                                                                    
     ensures that  the following benefits for  Canadians are                                                                    
     realized  in the  development  of  the Alaska  pipeline                                                                    
     project -  Canadian ownership,  access to  Alaska's gas                                                                    
     for  Canada's  petrochemical  industry, gas  to  remote                                                                    
     Canadian communities  along the pipeline,  property tax                                                                    
     benefits in  the Yukon,  maximization of  Canadian jobs                                                                    
     and supplies.   And it  says that the tolls  [for] this                                                                    
     project  would  be  set  by  Canada's  National  Energy                                                                    
     Board.                                                                                                                     
                                                                                                                                
     If you grant this license,  ladies and gentlemen of the                                                                    
     Alaska Senate,  all these promises made  by TransCanada                                                                    
     will come  true and Alaska  will be reduced  once again                                                                    
     to a colony.  I  remember in territorial days well when                                                                    
     corporations from outside made  decisions for us and we                                                                    
     just got the crumbs.  So don't sell us out.                                                                                
                                                                                                                                
     If you  vote yes  for TransCanada,  you are  voting for                                                                    
     someone  else to  take control  of our  future, someone                                                                    
     else, governed by a corporate  boardroom in Calgary and                                                                    
     the  Canadian government.   For  years to  come, future                                                                    
     Alaska  governors and  legislators will  have to  go to                                                                    
     these individuals,  hat in [hand],  and say:   "Please,                                                                    
     can you  hurry up?   Please,  can we  have some  of our                                                                    
     gas?   Please, can  we have  some jobs?"   You  and the                                                                    
     Alaska  people will  be frustrated.   And  the northern                                                                    
     part  of Alaska,  including Fairbanks  and many  remote                                                                    
     areas, will be left without  energy for years and maybe                                                                    
     decades.  Some of those communities will be abandoned.                                                                     
                                                                                                                                
2:46:53 PM                                                                                                                    
GOVERNOR HICKEL continued:                                                                                                      
                                                                                                                                
     So I urge you, the members  of the state Senate, not to                                                                    
     transfer  our  wealth,  our jobs,  and  our  future  to                                                                    
     Canada.    Don't  grant   exclusive  control  over  the                                                                    
     resource to Canada,  with no commitment to  build a gas                                                                    
     line.  Don't sell us out.                                                                                                  
                                                                                                                                
     The U.S.-Canada natural gas treaty  calls for Canada to                                                                    
     prebuild a pipeline to Chicago  and another to the West                                                                    
     Coast.   They  built  both.   Through these  pipelines,                                                                    
     they have sold over 14  trillion cubic feet of Canadian                                                                    
     natural  gas ...  to the  U.S.   But this  is what  the                                                                    
     Canadian National  Bank calls the dirty  little secret.                                                                    
     According to  that treaty, if  the Alaska  gas pipeline                                                                    
     is built into  Canada, the ... first  14 trillion cubic                                                                    
     feet  of  Alaska gas  must  be  sold  to Canada  -  not                                                                    
     America, but Canada.                                                                                                       
                                                                                                                                
     So if  this is true, those  that think our gas  will go                                                                    
     [via]  TransCanada   to  America  haven't   done  their                                                                    
     homework.  This is an  issue of enormous importance.  I                                                                    
     urge this committee to look into it.                                                                                       
                                                                                                                                
     Governor Palin  has made the  wrong decision.   As most                                                                    
     of you  know, I endorsed  Sarah Palin as  candidate for                                                                    
     governor in 2006,  and I co-chaired her  campaign.  She                                                                    
     has proven  to be  a good  governor.   But I  cannot be                                                                    
     silent  on  this decision  because  it  is so  bad  for                                                                    
     Alaska.  She  knows my views.  On April  7, I flew here                                                                    
     to  Juneau  to  advise  her  that  this  was  the  most                                                                    
     important  decision since  statehood.   I met  with her                                                                    
     again on July 1 in Anchorage.   I asked, over and over,                                                                    
     why  build  an  Alaska   gas  line  through  Canada,  a                                                                    
     question she didn't answer.                                                                                                
                                                                                                                                
     Now it  is up to you  to reverse that decision  for the                                                                    
     good of the Alaska people.   If you take this ... step,                                                                    
     Governor Palin in her heart  of hearts may be thankful.                                                                    
     She has a  gift of moving beyond  temporary defeats and                                                                    
     turning them into  victories.  I haven't given  up.  If                                                                    
     you  vote down  TransCanada, I  think she  will embrace                                                                    
     the all-Alaska line as she used to.                                                                                        
                                                                                                                                
2:49:27 PM                                                                                                                    
GOVERNOR HICKEL continued:                                                                                                      
                                                                                                                                
     Let  me  describe what  can  happen  if you  deny  this                                                                    
     license.   The  door  ...  will swing  wide  open to  a                                                                    
     wonderful new  era for Alaska.   The next step  will be                                                                    
     "build it and own it."                                                                                                     
                                                                                                                                
     If we put all our shoulders  to the wheel, we can start                                                                    
     getting  North  Slope  gas  to   ...  Alaskans  in  the                                                                    
     Interior in five  or six years.  Then we  will move our                                                                    
     gas to  the highest and  most profitable markets.   And                                                                    
     by keeping the gas line  within our boundaries, we will                                                                    
     keep the  jobs - all  the jobs -  here at home.   These                                                                    
     jobs belong to Alaskans, not  to Canadians.  Don't sell                                                                    
     us out.                                                                                                                    
                                                                                                                                
     How  much  will an  all-Alaska  gas  line system  cost?                                                                    
     About  half  of  the  $50   billion  estimated  by  the                                                                    
     TransCanada  line.   And  we don't  have  to build  LNG                                                                    
     tankers; there are plenty available  to ship our gas to                                                                    
     the markets.                                                                                                               
                                                                                                                                
     As anyone  in business knows,  you have to  spend money                                                                    
     to  make money.   If  Alaska invests  $7 billion  in an                                                                    
     all-Alaska  gas  line,  the market  will  jump  at  the                                                                    
     chance to finance the rest.   It's ... not only doable,                                                                    
     it  would be  the ...  best investment  we could  make.                                                                    
     Keep  in mind:   Wall  Street is  a risky  place to  be                                                                    
     right now.   It's the right time  to diversify Alaska's                                                                    
     portfolio.                                                                                                                 
                                                                                                                                
2:51:00 PM                                                                                                                    
GOVERNOR HICKEL continued:                                                                                                      
                                                                                                                                
     Building  and operating  the all-Alaska  gasline:   For                                                                    
     those     not     familiar    with     government-owned                                                                    
     infrastructure,  let me  describe the  steps we  should                                                                    
     take.   It starts  with a decision,  a decision  by our                                                                    
     governor, supported by the  legislature.  Remember when                                                                    
     JFK  announced we  were going  to the  moon?   Then she                                                                    
     names  a  project  director  who  hires  the  best  gas                                                                    
     pipeline  builder in  North America.   State  employees                                                                    
     will not  build the gas  line.  The best  pipeliners in                                                                    
     our country will build it.                                                                                                 
                                                                                                                                
     Once the pipeline is built,  it will be operated by the                                                                    
     private  sector through  a management  contract.   Such                                                                    
     contracts are  used worldwide  to manage  pipelines and                                                                    
     market gas.   Keep in mind that  an all-Alaska pipeline                                                                    
     would be built  much faster and cheaper  than either of                                                                    
     the two  Canadian lines being  proposed because  it can                                                                    
     start  ... nearly  immediately.   It  would follow  the                                                                    
     right-of-way  of the  Trans-Alaska oil  line.   Permits                                                                    
     and right-of-ways already exist.                                                                                           
                                                                                                                                
     And  for those  who criticize  projects created  by the                                                                    
     State  of Alaska,  take another  look.   The all-Alaska                                                                    
     natural gas  pipeline will follow  in the  tradition of                                                                    
     our state's roads,  ports, and highways.   And think of                                                                    
     the  Ted  Stevens  International Airport,  the  Bradley                                                                    
     Lake  hydro  facility, the  Four  [Dam]  Pool, and  the                                                                    
     Alaska Railroad.  And don't forget the permanent fund.                                                                     
                                                                                                                                
     I want to  take a minute now to  clarify the difference                                                                    
     between  monetizing   and  maximizing   our  resources.                                                                    
     [Monetizing] means  transforming our gas into  cash for                                                                    
     the  state  treasury.   And  so,  one of  the  greatest                                                                    
     failures of  AGIA was  that it  failed to  require that                                                                    
     the ... priority use of  our gas liquids must be within                                                                    
     the state.                                                                                                                 
                                                                                                                                
     That was a fatal flaw.   The intent of our Founders was                                                                    
     to  create an  outstanding quality  of life  in Alaska.                                                                    
     With   the  rich   gas   liquids   ...  from   Prudhoe,                                                                    
     generations of our people will  earn a decent salary so                                                                    
     they  can afford  to live  here,  raise their  children                                                                    
     here, and enjoy all the glories of the North.                                                                              
                                                                                                                                
2:53:45 PM                                                                                                                    
GOVERNOR HICKEL continued:                                                                                                      
                                                                                                                                
     How will  the state get the  gas it needs for  a state-                                                                    
     owned all-Alaska gas line?   First of all, keep in mind                                                                    
     that  it's  our  gas.    The state  has  the  power  of                                                                    
     taxation and ultimate control over  all leases on state                                                                    
     lands.   All the state  has to  do is announce  we will                                                                    
     build the  all-Alaska line and invite  the producers to                                                                    
     use  it.   They  will join  us in  a  heartbeat.   They                                                                    
     recognize  they   have  made  tens  of   billions  from                                                                    
     Alaska's lands and  resources.  They do not  want to be                                                                    
     shut out of the great promise ahead of us.                                                                                 
                                                                                                                                
     Alaska has  all the power  it needs to choose  where to                                                                    
     build its  pipeline and market  where it will  sell its                                                                    
     gas.   It  simply needs  to  choose not  to yield  that                                                                    
     power.   Don't  sell us  out.   Remember  who you  are.                                                                    
     Remember where  you are.   This is Alaska.   Don't sell                                                                    
     us out.   And the  very worst thing  to do would  be to                                                                    
     ... yield control and pay  someone $500 million to take                                                                    
     it.  The  world is watching to see if  we will fall for                                                                    
     something so bad for our state.                                                                                            
                                                                                                                                
     But I  want to end on  a positive note.   Your vote can                                                                    
     build a culture here  dreamed of by Alaskan visionaries                                                                    
     for a  century, a society  of productive people.   Your                                                                    
     vote  will determine  if this  Senate will  live up  to                                                                    
     your  pledge  as  public  servants,  to  care  for  the                                                                    
     residents of this  unique owner state and  make a model                                                                    
     for  the world.   Yes,  Alaska can  inspire people  all                                                                    
      over the [globe] to follow our lead.  God bless you                                                                       
     and thank you.                                                                                                             
                                                                                                                                
2:55:43 PM                                                                                                                    
SENATOR DYSON  thanked Governor Hickel, but  said he'd understood                                                               
that  a regulated  independent pipeline  would be  like a  common                                                               
carrier in that  shippers would have a market and  end users, and                                                               
they'd control where the  gas ends up.  He asked:   How could the                                                               
Canadian government  or a  Canadian firm  pull shippers'  gas off                                                               
and use it for purposes other than what the shippers intended?                                                                  
                                                                                                                                
GOVERNOR  HICKEL  answered  by  questioning  how  that  could  be                                                               
stopped  because Canada  is its  own country.   He  said an  all-                                                               
Alaska  pipeline doesn't  work that  way.   The gas  would go  to                                                               
Valdez  and  could be  shipped  where  needed, for  instance,  as                                                               
liquefied  natural gas  (LNG)  to  the U.S.  West  Coast.   Since                                                               
Alaska's  economic ties  are with  Asia, it  could be  shipped to                                                               
China, Japan,  Korea, and so on.   He said the  Canadian gas line                                                               
couldn't do that.                                                                                                               
                                                                                                                                
SENATOR DYSON  responded that it's  against the law  and shippers                                                               
wouldn't allow their gas to be  taken to a market other than what                                                               
they  intended  and the  contracts  they'd  made, which  probably                                                               
would be long-term contracts.                                                                                                   
                                                                                                                                
GOVERNOR HICKEL  reiterated earlier points and  added that before                                                               
statehood "we could  never get anything past Seattle."   He cited                                                               
some history and said he doesn't want to lose that.                                                                             
                                                                                                                                
SENATOR DYSON responded that TransCanada  said explicitly that if                                                               
the shippers  nominate gas for  the pipeline for the  LNG market,                                                               
they'll build the pipeline to  Valdez or Cook Inlet, wherever the                                                               
shippers want  it to  go.   He asked  Governor Hickel  whether he                                                               
believes that isn't a true promise.                                                                                             
                                                                                                                                
GOVERNOR HICKEL  noted he has  nothing against Canada,  but asked                                                               
why  someone would  do  that.   He  added,  "We  should build  it                                                               
ourselves.  We own the gas.  It's our land."                                                                                    
                                                                                                                                
2:59:42 PM                                                                                                                    
SENATOR  WAGONER pointed  out that  he'd distributed  information                                                               
he'd  received  last  week,  consisting  of  federal  legislation                                                               
H.R. 6515; a  page labeled "Section from  an amendment introduced                                                               
by Senator Bingaman  (D-NM), chairman of the  Senate Committee on                                                               
Energy  and Natural  Resources,  introduced on  July  24, 2008  -                                                               
currently pending  on the  Senate calendar";  and a  page labeled                                                               
"Use of Loan Guarantees" attributed to Greenberg Traurig.                                                                       
                                                                                                                                
SENATOR  WAGONER  explained  that  Congress  is  watching  Alaska                                                               
closely.   The proposed amendment in  part gave the sense  of the                                                               
U.S.  Senate  that   "the  Alaska  natural  gas   pipeline  is  a                                                               
critically important  national infrastructure project  that would                                                               
benefit all consumers  in the United States" and went  on to talk                                                               
about reserves and so on.                                                                                                       
                                                                                                                                
SENATOR WAGONER said  H.R. 6515 failed in the  U.S. House because                                                               
it  required a  two-thirds vote.   This  resolution attempted  to                                                               
reinstate  the ban  on  exporting  oil and  talked  about the  35                                                               
trillion  cubic  feet  (Tcf), saying  these  gas  supplies  could                                                               
contribute significantly  to meeting  U.S. energy needs,  but the                                                               
lack  of  a  natural  gas transportation  system  prevents  these                                                               
resources  from reaching  Lower 48  markets.   He  said, as  U.S.                                                               
Senator  Ted Stevens  noted, that  everything indicates  this gas                                                               
won't be allowed to be exported outside the U.S.                                                                                
                                                                                                                                
GOVERNOR HICKEL responded that as  Secretary of the Interior he'd                                                               
heard  all those  things.   Kansas  isn't told  it cannot  export                                                               
wheat around the  world, for instance.  He  related some history,                                                               
suggested the  world doesn't understand Alaska's  uniqueness, and                                                               
said it's  the only commonly owned  area in the world  that has a                                                               
democracy.  He  reiterated the need to manage  the resources that                                                               
Alaska owns.                                                                                                                    
                                                                                                                                
3:05:03 PM                                                                                                                    
SENATOR THOMAS  referred to attachments mentioned  in the written                                                               
copy of Governor Hickel's testimony,  including one that says the                                                               
U.S. Department  of Energy (DOE)  is granting the  application of                                                               
Yukon Pacific  Corporation (YPC)  for authorization of  Section 3                                                               
of  the Natural  Gas Act  to export  natural gas  from the  North                                                               
Slope  of Alaska  to the  Pacific Rim  countries of  Japan, South                                                               
Korea,  and Taiwan  by  means of  the  proposed Trans-Alaska  Gas                                                               
System (TAGS).   Senator Thomas noted it says  DOE concluded that                                                               
this export won't be inconsistent with the public interest.                                                                     
                                                                                                                                
SENATOR THOMAS  said he believes  this gets to one  major problem                                                               
when looking at  the reality, including what  Senator Wagoner and                                                               
U.S.  Senator Ted  Stevens  said recently  about  the reality  of                                                               
exporting this natural gas.  People are concerned about it.                                                                     
                                                                                                                                
GOVERNOR HICKEL asked what the concern is.                                                                                      
                                                                                                                                
SENATOR  THOMAS  responded  that  it's whether  there'll  be  the                                                               
ability  to export  natural gas  to  those countries.   Even  for                                                               
offshore  drilling  on  the Outer  Continental  Shelf  (OCS),  if                                                               
that's  approved  for  exploration and  development,  people  are                                                               
indicating  gas and  oil would  have  to come  to the  U.S.   Now                                                               
almost  70  percent of  the  energy  is  being imported.    While                                                               
expressing support  for in-state  gas, he suggested  the question                                                               
is whether to limit the opportunity  to the Denali project if the                                                               
TransCanada  project is  done away  with.   He  noted just  eight                                                               
months  ago  the  Port  Authority had  the  opportunity  to  come                                                               
forward with its plan, but didn't for whatever reasons.                                                                         
                                                                                                                                
SENATOR  THOMAS  said this  has  been  a  concept since  1989  or                                                               
before,  when  the Natural  Gas  Act  was  passed.   He  surmised                                                               
everybody wants  to believe  what Governor  Hickel is  saying and                                                               
produce the  gas in  Alaska, run  it through  Alaska, and  use it                                                               
here.   While  supporting this  concept, however,  Senator Thomas                                                               
said a  fleshed-out plan isn't  there that shows how  everyone is                                                               
involved,  what  it will  cost  the  state,  and the  reality  of                                                               
whether that gas can be exported.                                                                                               
                                                                                                                                
3:09:02 PM                                                                                                                    
GOVERNOR  HICKEL reiterated  that  as Secretary  of the  Interior                                                               
he'd seen  those battles.  He  asked why they don't  say wheat or                                                               
beef from  Montana cannot be  sold; noted  the market is  a world                                                               
market;  and emphasized  that because  it's Alaska's  gas, Alaska                                                               
should decide  and say what  to do.   He suggested if  Alaska had                                                               
had the opportunity  to "become an independent  country under the                                                               
United States" it  would have been all right.   He asked how many                                                               
states are owned in common like Alaska and answered "nobody."                                                                   
                                                                                                                                
GOVERNOR HICKEL  related his experience  in China, where  he said                                                               
the  desire in  return  for building  a pipeline  was  to have  a                                                               
contract to  buy the LNG.   Suggesting  the U.S. doesn't  want to                                                               
see Alaska be a competitor, he  said Alaska cannot let some other                                                               
state or country dictate what it does with its resources.                                                                       
                                                                                                                                
3:13:00 PM                                                                                                                    
SENATOR  McGUIRE asked  how Governor  Hickel had  arrived at  the                                                               
decision to oppose rewarding the license to TransCanada.                                                                        
                                                                                                                                
GOVERNOR HICKEL  asked:  Why give  away our resources?   Why have                                                               
another country  tell Alaska what  to do?   He said he'd  gone to                                                               
China and Russia years ago, and  Russia wants to change its whole                                                               
government to  be like Alaska.   He said the resources  belong to                                                               
the total, and the commons of the ocean are owned by no one.                                                                    
                                                                                                                                
SENATOR McGUIRE noted  that some folks who  support granting this                                                               
license to TransCanada  say it will bring  more opportunities for                                                               
the state.   She asked how Governor Hickel sees  that as limiting                                                               
the opportunities.                                                                                                              
                                                                                                                                
GOVERNOR  HICKEL replied  by  asking  why it  should  be sold  to                                                               
Canada and  how that helps  Alaska.   He said Canada  hasn't even                                                               
settled its land  claims yet.  He again suggested  taking the gas                                                               
to Valdez or another port from which it can be shipped.                                                                         
                                                                                                                                
3:17:57 PM                                                                                                                    
SENATOR  DYSON noted  that some  people in  the industry  that he                                                               
respects  have suggested  that maybe  Alaska itself  should build                                                               
the pipeline somewhere east of  Delta Junction and let the market                                                               
direct  where it  goes.   He asked:   Do  you envision  using the                                                               
permanent fund corpus to build  the line and treatment facilities                                                               
or at least use it as a backstop for borrowing the money?                                                                       
                                                                                                                                
GOVERNOR HICKEL  opined that  it wouldn't  be necessary  and that                                                               
there'd  be  no problem  finding  financing.   Whether  it  costs                                                               
$10 billion or  $50 billion, 20 percent  will be earned  on that.                                                               
Or if a  few billion were financed, the market  would finance the                                                               
rest  because it's  unique, and  the gas  line would  make Alaska                                                               
billions of  dollars.  Relating  his experience from  Asia, where                                                               
he  said  resources  besides  coal   are  lacking  but  money  is                                                               
available, he emphasized that the arctic has those resources.                                                                   
                                                                                                                                
3:19:51 PM                                                                                                                    
SENATOR  THOMAS  said  the  producers are  cycling  gas  now  and                                                               
reinjecting about 8  billion cubic feet a day  (Bcf/d) at Prudhoe                                                               
Bay.  He  asked:  How would  we get that gas out  of their hands?                                                               
Would  we take  back  leases,  as at  Point  Thomson?   He  noted                                                               
TransCanada wouldn't  be buying and  selling gas, but  would just                                                               
transport  it, whereas  the producers  might sell  some into  the                                                               
Canadian  tar sands  or through  whatever  lines take  it to  the                                                               
Lower 48.                                                                                                                       
                                                                                                                                
GOVERNOR HICKEL again  stressed that it is Alaska's  gas and that                                                               
Alaska should develop it.  He  said it takes a strong legislature                                                               
and  governor to  tell the  oil companies  that this  is Alaska's                                                               
gas.   Giving some  history involving oil,  him, and  former U.S.                                                               
presidents,  he  added  that  he  won't give  up  and  that  U.S.                                                               
education doesn't  teach about the commons,  which conflicts with                                                               
a lot of economic reasoning.                                                                                                    
                                                                                                                                
3:23:25 PM                                                                                                                    
CHAIR  HUGGINS  referred  to  Governor  Hickel's  two  books  and                                                               
praised  his   long  history  of   service  and   consistency  in                                                               
supporting  a  course  of  action,   noting  Governor  Hickel  is                                                               
cautioning that the choices here  have a long-term impact.  Chair                                                               
Huggins expressed  concern about the $500  million being offered,                                                               
that the  state is limiting  its ability to deliver  in-state gas                                                               
by removing flexibility, and about the treble damages.                                                                          
                                                                                                                                
CHAIR HUGGINS  also voiced  concern that  more money  will follow                                                               
the $500  million, including a  request from  Alaska's Department                                                               
of   Natural  Resources   (DNR)  for   $6.3  million   to  ensure                                                               
TransCanada's compliance with license terms  and a like amount to                                                               
ensure   that  the   first  and   subsequent  open   seasons  are                                                               
successful.   He agreed with  Governor Hickel's counsel  to avoid                                                               
giving up exclusive control and selling Alaska out.                                                                             
                                                                                                                                
3:27:15 PM                                                                                                                    
GOVERNOR  HICKEL concluded  by saying  he didn't  know when  this                                                               
battle  would be  won.   People  are starting  to understand  the                                                               
uniqueness  of  Alaska,  he  told members,  and  six  years  ago,                                                               
62 percent of  the people voted  for an all-Alaska pipeline.   He                                                               
surmised  those  with economic  interests  don't  want Alaska  to                                                               
develop  that  gas   because  they  cannot  own  it   and  be  in                                                               
competition.  He  said Alaska doesn't have to put  up with others                                                               
telling it  what to do, and  ideas are more powerful  than money.                                                               
Returning  to the  idea of  the commons,  he predicted  that will                                                               
come to reality.                                                                                                                
                                                                                                                                
CHAIR HUGGINS thanked  Governor Hickel for his  time, wisdom, and                                                               
service.                                                                                                                        
                                                                                                                                
The committee took an at-ease from 3:32:58 PM to 3:41:12 PM.                                                                
                                                                                                                                
CHAIR HUGGINS introduced  Governor Tony Knowles, noting  he was a                                                               
Yale  graduate  and  Vietnam  veteran   and  had  been  mayor  of                                                               
Anchorage and a two-term governor of Alaska.                                                                                    
                                                                                                                                
3:43:29 PM                                                                                                                    
GOVERNOR KNOWLES lauded Governor Hickel  for his service and told                                                               
members he always learns something  from him and his grand vision                                                               
for the future.  Governor Knowles testified as follows:                                                                         
                                                                                                                                
     I thank  you for the  opportunity to share  my thoughts                                                                    
     with you  on the Alaska  Gasline Inducement Act,  as to                                                                    
     whether it  will promote or  hinder the  realization of                                                                    
     development  of North  America's largest  known reserve                                                                    
     of  natural  gas.   Like  every  other former  governor                                                                    
     since  the discovery  of the  North Slope  reservoir, I                                                                    
     worked  hard   to  promote  the  development   of  this                                                                    
     resource,  as have  past  legislators  and the  current                                                                    
     governor and this legislature.                                                                                             
                                                                                                                                
     We all know  the stakes are high.  The  benefits of the                                                                    
     largest private-sector project  in American history are                                                                    
     unmatched,   both  for   Alaska  and   America.     The                                                                    
     difficulty and risks are equally  significant.  We also                                                                    
     all  know the  current and  projected price  of natural                                                                    
     gas  is  the dominant  factor  in  making this  project                                                                    
     viable.  At a little over $10  an Mcf, it is at an all-                                                                    
     time  historical high  for this  time  of year.   On  a                                                                    
     cautionary  note,  though,  it has  fallen  29  percent                                                                    
     since April.                                                                                                               
                                                                                                                                
     Now  this  economic  advantage, nonexistent  until  the                                                                    
     last  three  years,  offers  the  State  of  Alaska  an                                                                    
     historic   opportunity  for   building  a   success  or                                                                    
     creating an unfortunate barrier.                                                                                           
                                                                                                                                
     It is my opinion that  the consequences of passing AGIA                                                                    
     as  it  now  stands  could  needlessly  jeopardize  the                                                                    
     entire project.   It surrenders the  sovereign right of                                                                    
     the  State   of  Alaska  to  negotiate   for  the  best                                                                    
     interests  of  its  citizens.     And  its  very  risky                                                                    
     subsidy/grant of  $500 million  of Alaska's money  to a                                                                    
     Canadian corporation for the  purpose of applying for a                                                                    
     certificate is, I think, a  very wrong decision for the                                                                    
     State of Alaska.                                                                                                           
                                                                                                                                
     The passage of  AGIA could well be  termed as snatching                                                                    
     defeat from the jaws of victory.   I urge you to reject                                                                    
     these impediments to developing our resource.                                                                              
                                                                                                                                
3:46:58 PM                                                                                                                    
GOVERNOR KNOWLES continued:                                                                                                     
                                                                                                                                
     Let me  take just  a minute  to explain  my conclusions                                                                    
     and  suggest a  positive alternative  approach.   While                                                                    
     price is a primary factor  in making a gas line viable,                                                                    
     it's not the only  determining factor.  Costing upwards                                                                    
     of $30 billion, spanning  two countries and five states                                                                    
     and  provinces, extending  3,600 miles  of some  of the                                                                    
     world's  most challenging  terrain and  extreme weather                                                                    
     conditions, the  complexity and  scale of  this project                                                                    
     demand  the  cooperation  and   alignment  of  all  the                                                                    
     participating   parties,   public  and   private,   for                                                                    
     successful completion.                                                                                                     
                                                                                                                                
     Yet  the  AGIA legislation,  prior  to  any process  in                                                                    
     determining the  costs or  capitalizing the  project or                                                                    
     before  the Federal  Energy Regulatory  Commission, ...                                                                    
     has  picked  TransCanada  as  Alaska's  choice  as  the                                                                    
     pipeline owner  and in the  legislation has  provided -                                                                    
     with  the  overwhelming majority  of  the  money -  for                                                                    
     TransCanada   to  solicit   gas   shipments  from   the                                                                    
     producers  and to  apply for  the certificate  to build                                                                    
     the line from FERC.                                                                                                        
                                                                                                                                
     Meanwhile, ConocoPhillips and  BP, owners of two-thirds                                                                    
     of  the gas  leases, have  initiated their  own project                                                                    
     for the same  goals.  Dividing the  participants is not                                                                    
     in the  state's best interests  and, as I  said before,                                                                    
     could jeopardize the entire project.                                                                                       
                                                                                                                                
     Everyone acknowledges  that the gas line  must have the                                                                    
     commitment of the owners of  the gas leases to ship the                                                                    
     gas, regardless  of who owns  the gas line.   Now, this                                                                    
     commitment is  an irrevocable  commitment to  ship, for                                                                    
     the next 20 to 25 years,  4.5 billion cubic feet of gas                                                                    
     a day. ... The $30  billion for the construction of the                                                                    
     pipeline  pales  to  the  enormity  of  that  financial                                                                    
     commitment  by  these  companies,  which  could  exceed                                                                    
     upwards of $180 billion.                                                                                                   
                                                                                                                                
     It  is  obvious  they  would probably  in  making  that                                                                    
     commitment  to  ship  ...  choose  their  own  pipeline                                                                    
     project  rather than  a lesser  study done  for another                                                                    
     project.   But at the same  time the owners of  the gas                                                                    
     leases  recognize that  they need  both TransCanada  or                                                                    
     another  Canadian pipeline  company  and  the State  of                                                                    
     Alaska.                                                                                                                    
                                                                                                                                
     Now,  from Alaska's  perspective, there  are advantages                                                                    
     to both  a shipper-owned  line and  a pipeline-company-                                                                    
     owned  line.     As  the  owner  and   shipper  of  ...                                                                    
     12.5 percent  of  the  royalty  gas, the  state  is  in                                                                    
     alignment  with  the  shippers in  wanting  the  lowest                                                                    
     tariffs  to maximize  the financial  returns.   But the                                                                    
     state  also wants  to promote  maximum exploration  and                                                                    
     development of  additional gas.   This is  in alignment                                                                    
     with   the   interests  of   a   pipeline-company-owned                                                                    
     project.                                                                                                                   
                                                                                                                                
     Perhaps  the most  disturbing consequence  of the  AGIA                                                                    
     legislation   is  the   self-imposed  prohibition   and                                                                    
     treble-damage  penalty  of  the  state  discussing  any                                                                    
     fiscal terms of a  pipeline project with another party.                                                                    
     Beyond  a field  day for  lawyers in  interpreting when                                                                    
     and  how   this  applies,  this  is   an  unprecedented                                                                    
     transfer of our state's sovereignty.                                                                                       
                                                                                                                                
     It is  my belief that  the state's sovereign  right and                                                                    
     responsibility  to negotiate  the  terms  of a  project                                                                    
     that  will  have  a multi-generational  effect  on  our                                                                    
     future is  not transferable  to a  Canadian corporation                                                                    
     or any  other party.   Alaska should never  hesitate or                                                                    
     be afraid  of directly negotiating jobs  and businesses                                                                    
     for Alaska's families.                                                                                                     
                                                                                                                                
     What  is   truly  baffling  to   me  is  that   we  are                                                                    
     transferring,    along    with     our    rights    and                                                                    
     responsibilities,  a   $500  million  subsidy   for  an                                                                    
     independent party  to hopefully  qualify to  build this                                                                    
     project.                                                                                                                   
                                                                                                                                
3:51:40 PM                                                                                                                    
GOVERNOR KNOWLES continued:                                                                                                     
                                                                                                                                
     I  mentioned earlier  about AGIA  ... snatching  defeat                                                                    
     from the  jaws of  victory.  Well,  let me  explain ...                                                                    
     how  we would  describe these  jaws of  victory, and  I                                                                    
     think that'll help us understand a better way forward.                                                                     
                                                                                                                                
     We  know the  conditions  are right  for this  project.                                                                    
     There  is an  extraordinary unity  behind the  project.                                                                    
     Can you think  of any project that  even comes somewhat                                                                    
     near to  the size  and scope of  this project  that has                                                                    
     such  broad   support?     The  civic,   business,  and                                                                    
     political leaders of two countries  and five states and                                                                    
     provinces - every  known organization of environmental,                                                                    
     organized labor, development,  and [indigenous] peoples                                                                    
     - have unified in support of this project.                                                                                 
                                                                                                                                
     The   price  of   gas  ...   has   made  this   project                                                                    
     commercially viable.   Now is  the time for  the state,                                                                    
     in its unique  position, to step forward  with a policy                                                                    
     that  is a  sensible, long-term  business plan  for the                                                                    
     construction  and operation  of  the  pipeline and  the                                                                    
     development of  known and  yet-to-be-discovered natural                                                                    
     gas  resources.   It should  reflect market  conditions                                                                    
     and Alaska's best interests.                                                                                               
                                                                                                                                
     The first  step of a policy  and a plan is  to identify                                                                    
     the  essential  participants  and   engage  them  in  a                                                                    
     collaborative process.   This would include  the owners                                                                    
     of the gas leases, including  Alaska as a royalty share                                                                    
     owner, TransCanada,  and to  identify the  interests in                                                                    
     the areas of negotiation.                                                                                                  
                                                                                                                                
3:53:57 PM                                                                                                                    
GOVERNOR KNOWLES continued:                                                                                                     
                                                                                                                                
     Now, there are  those ... who say that a  vote for AGIA                                                                    
     is  ...  a harmless  vote,  that  coming together  will                                                                    
     inevitably happen.  I disagree.   Many experts, to this                                                                    
     day, say  despite all  of the  unity and  the favorable                                                                    
     prices  that  this  is  - and  always  will  be,  until                                                                    
     construction - a marginal project.                                                                                         
                                                                                                                                
     The  limitations   placed  upon   the  state   and  the                                                                    
     unexplored   and   undetermined  relationship   between                                                                    
     parties, as  I mentioned, is a  lawyers' feeding frenzy                                                                    
     and the riskiest approach that  I believe that we could                                                                    
     possibly take.   At best,  Alaska would be on  the back                                                                    
     bench, with its hands tied  from intervening on our own                                                                    
     best interests.                                                                                                            
                                                                                                                                
     Now,   there  are   also  those   who   say  that   the                                                                    
     $500 million,  which  is  unprecedented  subsidy  to  a                                                                    
     private-sector project,  is a good investment  and that                                                                    
     we'll recoup it.  Well, this  defies logic to me.  They                                                                    
     say that  it will  lower the  tariff and  therefore the                                                                    
     state as a shipper will then recoup the money.                                                                             
                                                                                                                                
     Well,  now, think  about that  for  a minute.   We  own                                                                    
     12.5 percent.    That is  our  share.    So if  it's  a                                                                    
     benefit to us ... and we  pay the $500 million, why are                                                                    
     we subsidizing  this benefit  at no  cost to  the other                                                                    
     shippers:   BP,  ConocoPhillips, and  ExxonMobil?   Why                                                                    
     would  we ever  pay that  and they  get no  benefit and                                                                    
     they don't participate at all in it?                                                                                       
                                                                                                                                
     Now  ...  it   is  also  said  that  if   we  give  the                                                                    
     $500 million that  this will  elicit companies  to show                                                                    
     their interest. ...  I would hope so.  But  if you look                                                                    
     at the  scale of the  project, if $500 million  makes a                                                                    
     difference as  to whether they're interested  or not, I                                                                    
     don't think  we want them  as a partner; I  don't think                                                                    
     they would be capable.                                                                                                     
                                                                                                                                
     And finally,  in terms of  the $500 million,  if indeed                                                                    
     it  is an  investment, let  that reflect  itself in  an                                                                    
     ownership on the pipeline-ownership  side.  And I'm not                                                                    
     advocating  that, but  I'm saying  if you  do that  ...                                                                    
     then at least you will  guarantee your share will get a                                                                    
     return on  investment, through the rate  of return that                                                                    
     is given  by the  regulatory body.   And that's  how it                                                                    
     would  limit  your  share, the  participation  to  your                                                                    
     share, and you don't necessarily subsidize others.                                                                         
                                                                                                                                
3:56:18 PM                                                                                                                    
GOVERNOR KNOWLES continued:                                                                                                     
                                                                                                                                
     Now, there are  some that [say] ...  this doesn't limit                                                                    
     the opportunity,  that we  can sign  it and  that we'll                                                                    
     all get together afterwards.   Well, that comes from an                                                                    
     interpretation that  I don't see in  the legislation as                                                                    
     it's before  the public.   It very  specifically states                                                                    
     that the  state cannot negotiate any  fiscal terms with                                                                    
     what  is a  competing party.   And  there's already,  I                                                                    
     know,  arguments and  discussions  on  "Does this  mean                                                                    
     that you can't change the  tax rate and the general gas                                                                    
     tax that has nothing to do with a specific project?"                                                                       
                                                                                                                                
     But  yet  there's  arguments on  the  other  side  that                                                                    
     absolutely ...  you can't do  that and the  state would                                                                    
     tie  its hands  on its  most sovereign  powers.   And I                                                                    
     find that does  not open it up, but  rather it entirely                                                                    
     limits what we're going to be doing.                                                                                       
                                                                                                                                
GOVERNOR KNOWLES  concluded by noting  that some say this  is too                                                               
far down  the road to  take a different  path.  He  suggested for                                                               
those there is a way out:  Put  it on the shelf for six months, a                                                               
year,  or what's  necessary to  see how  the other  project plays                                                               
out.   He  said  everyone agrees  it is  preferable  to have  all                                                               
parties working together to make this project happen.                                                                           
                                                                                                                                
3:58:31 PM                                                                                                                    
SENATOR WAGONER asked whether Governor  Knowles was promoting the                                                               
Denali  project, but  somewhat modified  to bring  in a  Canadian                                                               
pipeline partner.                                                                                                               
                                                                                                                                
GOVERNOR  KNOWLES  answered  no.     He  clarified  that  he  was                                                               
suggesting  that  it isn't  in  Alaska's  interests to  pick  the                                                               
winner prior to any public process.   As the Denali project moves                                                               
forward  in requesting  a FERC  license, the  all-Alaska pipeline                                                               
could  certainly do  that, as  could TransCanada  if it  wants to                                                               
pursue a  FERC application.   He opined that the  state shouldn't                                                               
choose or subsidize any party at this point.                                                                                    
                                                                                                                                
SENATOR  WAGONER said  the reason  there wasn't  a deal  with the                                                               
producers under the Stranded Gas  Development Act (SGDA) was that                                                               
the concessions  were $10.2 billion.   He'd sent a letter  to the                                                               
governor  asking about  $13.3  billion  in upstream  concessions,                                                               
including part  of the  gas treatment  plant.   He asked  why the                                                               
state  could get  a deal  with the  producers through  the Denali                                                               
process any better than the SGDA process.                                                                                       
                                                                                                                                
GOVERNOR KNOWLES  replied that nothing  says concessions  have to                                                               
be made, and his suggestion  was that negotiations must occur and                                                               
that  the state  shouldn't  back away  from negotiating  directly                                                               
with the  parties that own the  leases to the gas.   There cannot                                                               
be  a  pipeline project  without  their  commitment to  ship,  no                                                               
matter who owns it.  The  state doesn't have to agree to anything                                                               
that isn't deemed in its best interests.                                                                                        
                                                                                                                                
4:01:06 PM                                                                                                                    
SENATOR  WAGONER   concurred  with  that  point,   but  said  the                                                               
producers had  the opportunity  to apply  under AGIA  but didn't,                                                               
claiming  in  part that  AGIA  didn't  provide fiscal  certainty.                                                               
Also,  AGIA was  set  up  to protect  the  state's interests  and                                                               
rights, not those of the producers.                                                                                             
                                                                                                                                
GOVERNOR  KNOWLES opined  that that's  one interpretation  of the                                                               
purpose  of AGIA,  which he  recalled as  being advertised  as an                                                               
open,  competitive process  that turned  out to  be an  exclusive                                                               
process after it was laid out,  primarily aimed at one party that                                                               
didn't apply.   He said what exists isn't an  opportunity to look                                                               
at all  offers and that no  offer will have all  the negotiations                                                               
completed at the time of the offer.                                                                                             
                                                                                                                                
GOVERNOR KNOWLES also surmised that  the producers had chosen not                                                               
to  participate because  there was  no honest  discussion of  the                                                               
demands with respect to how those  would fit into a business plan                                                               
to  produce a  pipeline.    He highlighted  the  need  to have  a                                                               
discussion to do  that, which he said any business  plan will do.                                                               
He further suggested  that AGIA doesn't allow  avoiding that, but                                                               
pushes the day  outward.  He expressed concern  that this project                                                               
is still marginal and doesn't  allow the necessary negotiation of                                                               
the terms of this agreement.                                                                                                    
                                                                                                                                
4:03:19 PM                                                                                                                    
CHAIR HUGGINS  asked:   As governor,  did you  contemplate paying                                                               
somebody $500 million to participate in a gas pipeline?                                                                         
                                                                                                                                
GOVERNOR KNOWLES answered that it  was a different time, with oil                                                               
at $9 to $20 a barrel.                                                                                                          
                                                                                                                                
CHAIR HUGGINS asked if he  recalled any scenario under which he'd                                                               
have considered subjecting the state  to treble damages if it did                                                               
something.                                                                                                                      
                                                                                                                                
GOVERNOR KNOWLES  replied absolutely not.   He explained  that in                                                               
2000-2001 natural  gas spiked  at $3.50 an  MCF and  everyone got                                                               
excited that it would make  a pipeline viable.  Discussions began                                                               
with  the producers  and there  was a  meeting with  the pipeline                                                               
companies of the day, including  Duke Energy; El Paso; Foothills,                                                               
a precursor of TransCanada; and others.   When asked if they'd be                                                               
interested  in participating,  those  companies  had said  they'd                                                               
participate only with the producers' commitment to ship.                                                                        
                                                                                                                                
GOVERNOR  KNOWLES added  that  most gas  companies  are owned  by                                                               
pipeline companies  and not producers,  but they don't  build the                                                               
line until  getting the  commitment to ship.   He  recalled being                                                               
advised  that the  state shouldn't  have  any ownership  interest                                                               
unless  it  could  be  shown  to be  absolutely  in  the  state's                                                               
financial  best interest;  there was  no consideration  of giving                                                               
money to  a selected  party during the  process or  selecting the                                                               
winner prior to the FERC process.                                                                                               
                                                                                                                                
4:06:20 PM                                                                                                                    
SENATOR THOMAS  asked:  Why  would the  Denali folks, who  said a                                                               
year ago that it's uneconomic,  risky, uncertain, and so on, rush                                                               
forward now for preapproval from  FERC, spending $600 million and                                                               
incorporating most of the state's  must-haves into a contract, if                                                               
it was believed  to be marginally feasible?   Why wouldn't Denali                                                               
just wait to see whether someone else proves this up?                                                                           
                                                                                                                                
GOVERNOR KNOWLES  noted Denali  would have  to speak  for itself,                                                               
but  surmised the  belief  is this:   At  the  current price  and                                                               
what's  projected over  7-10 years  while the  pipeline comes  on                                                               
line,  it is  economically  viable  but not  a  slam-dunk.   Thus                                                               
Denali is  putting so much capital  into the phase of  proving it                                                               
up before the open season, when  that commitment to ship would be                                                               
made.  He suggested the $600 million  is being put in to make the                                                               
best possible  case for  a commitment  of some  $150-180 billion.                                                               
The desire  is to  be as  sure as possible.   He  surmised Denali                                                               
doesn't believe the proposed project  would provide the necessary                                                               
information to make that kind of commitment.                                                                                    
                                                                                                                                
SENATOR  THOMAS asked  where  the project  would  be if  somebody                                                               
hadn't stepped forward to spend some money to push it forward.                                                                  
                                                                                                                                
GOVERNOR  KNOWLES responded  that he  doesn't believe  it is  the                                                               
state's  responsibility  or  role  to spend  money  such  as  the                                                               
$500 million  to  explore whether  the  project  is viable.    He                                                               
opined that  since all signals  show there can be  a commercially                                                               
viable  project, the  state is  in  the unique  position to  call                                                               
those parties together and insist that they negotiate.                                                                          
                                                                                                                                
GOVERNOR KNOWLES added that signals  have been given that this is                                                               
not  only a  viable alternative,  but perhaps  the preferred  one                                                               
when  compared with  the  course  being embarked  upon  now.   He                                                               
referred to  Governor Hickel's testimony and  cautioned that once                                                               
the state starts  down that path, there isn't  a 24-hour "buyer's                                                               
remorse" clause.                                                                                                                
                                                                                                                                
4:11:22 PM                                                                                                                    
SENATOR  WIELECHOWSKI  recalled  a previous  speech  by  Governor                                                               
Knowles and  asked what analysis  his administration had  done on                                                               
the viability of  an all-Alaska line and whether  his opinion has                                                               
changed, particularly with respect to the state's participation.                                                                
                                                                                                                                
GOVERNOR KNOWLES  answered that there'd been  an extensive public                                                               
process and he'd  always felt good about the  foundation built in                                                               
terms of listening  to the public.  There'd been  little money to                                                               
hire   expert  consultants,   but  they'd   sat  down   with  the                                                               
principals, both  producers and pipeline companies.   They'd also                                                               
talked with  leadership throughout Alaska about  the state's best                                                               
position.    Although  it  didn't select  the  winner,  the  best                                                               
position  was the  most economical  at that  time, the  so-called                                                               
highway route,  which had  the most  interest for  a commercially                                                               
viable project at $3.50 per MCF.                                                                                                
                                                                                                                                
GOVERNOR KNOWLES recalled  that the public spoke  out strongly on                                                               
the need for  in-state gas; for hiring and  training Alaskans and                                                               
having  a strong  project labor  agreement, not  making the  same                                                               
mistakes  with  Title  29  as  during the  building  of  the  oil                                                               
pipeline  with  respect  to  Alaska  Native  people;  and  for  a                                                               
commitment   to  growing   Alaskan   businesses.     Given   that                                                               
foundation,  he  said,  he'd  felt  the state  was  in  a  strong                                                               
position to negotiate well with the producers.                                                                                  
                                                                                                                                
GOVERNOR KNOWLES  also stressed  that the  constitution prohibits                                                               
binding future legislators' actions  on taxation.  He highlighted                                                               
the need to discuss ways to  provide the most comfort in terms of                                                               
certainty without  forgoing that responsibility.   Noting that is                                                               
a  challenge, he  said it  nonetheless isn't  one to  shrink away                                                               
from.  If  giving certainty is wrong for 2  years, it's wrong for                                                               
10 or  20 years, and legislation  needs to be crafted  that gives                                                               
the most comfort to not only  the producers, but also the capital                                                               
market that  will loan them  the money.  He  emphasized stability                                                               
rather than certainty.                                                                                                          
                                                                                                                                
4:14:55 PM                                                                                                                    
SENATOR STEDMAN  asked:   In your  perspective, should  the state                                                               
take seriously  the statement  from the  major producers  that it                                                               
should provide fiscal certainty in some  form?  Or is the current                                                               
tax  structure fair  enough  so the  industry  will come  forward                                                               
without any alterations?                                                                                                        
                                                                                                                                
GOVERNOR KNOWLES replied  he wasn't well versed  enough to advise                                                               
on the specifics of the current  legislation or even what kind of                                                               
stability  would  be acceptable  to  the  state and  the  capital                                                               
market that  will loan that  money; that  will have to  be looked                                                               
into.    He  opined,  however, that  a  framework  would  include                                                               
something  along the  principle  of "share  the  gain, share  the                                                               
pain."   In times of increasing  prices for natural gas  and more                                                               
profitability, the  state would  take a  larger share;  if prices                                                               
dropped, the  state would take less  and share the pain.   Such a                                                               
structure would give the least need for change over time.                                                                       
                                                                                                                                
4:17:21 PM                                                                                                                    
SENATOR  McGUIRE thanked  Governor  Knowles  for his  leadership.                                                               
She  asked:   How do  you  see the  provisions that  give up  the                                                               
ability to  discuss incentives for  other projects?   Noting that                                                               
part of the bill disturbs her,  she asked how he'd have conducted                                                               
himself as governor under such rules.                                                                                           
                                                                                                                                
GOVERNOR  KNOWLES answered  that each  governor has  a style  and                                                               
method  of representing  the people's  interests; it  wouldn't be                                                               
his place to critique someone else's  style.  He then opined that                                                               
a  governor's most  powerful role  relates to  negotiation.   The                                                               
governor has  the power  to call  parties together  to negotiate,                                                               
which is why  he said Alaskans were pleased to  hear there'd be a                                                               
process to have all parties come forward with their best offer.                                                                 
                                                                                                                                
GOVERNOR KNOWLES said  there clearly is an  executive branch role                                                               
for  hard negotiations  in that.   Then  the legislature  has the                                                               
difficult role of approval.   There's overlap because legislative                                                               
leadership and  members are  an important  part of  a negotiating                                                               
position, and there must be  good communication so the state puts                                                               
its best foot forward.                                                                                                          
                                                                                                                                
GOVERNOR  KNOWLES   added  that  he  couldn't   conceive  of  the                                                               
advantages of taking away the state's  ability to act in the best                                                               
interests of  the Alaskan people.   In the beginning stages  of a                                                               
project, when  information hasn't been  developed on who  has the                                                               
best opportunity to  develop the pipeline, the state  needs to be                                                               
at  the table.   When  FERC gives  its certificate  and the  open                                                               
season awards shipping  contracts, the state wants  to be talking                                                               
with them  on behalf of  the best interests  of Alaska.   For the                                                               
state  to   remove  itself  from   that  forgoes   a  fundamental                                                               
responsibility.                                                                                                                 
                                                                                                                                
4:20:28 PM                                                                                                                    
SENATOR  McGUIRE  expressed  concern  that  so  little  has  been                                                               
reduced to  writing, resulting in a  field day for lawyers.   She                                                               
asked:   When negotiating as  governor, how did you  approach it,                                                               
and  did you  rely  on  interpretation of  a  statute  to be  the                                                               
contract?                                                                                                                       
                                                                                                                                
GOVERNOR KNOWLES  emphasized that  legislation isn't  required to                                                               
negotiate; he expressed puzzlement over  AGIA in this regard.  He                                                               
said negotiation  can be done  in an  open process.   He recalled                                                               
working with legislators that were  part of the public process in                                                               
a bipartisan approach  along with community and  civic leaders to                                                               
try to develop the best position for Alaska.                                                                                    
                                                                                                                                
GOVERNOR  KNOWLES  explained  that   such  a  process  gives  the                                                               
executive branch, as the primary  initial negotiator, the ability                                                               
to go in with  the full force of the state's  support to say what                                                               
is needed  in a project.   The  legislature then goes  through an                                                               
open and serious deliberative process  on how to approve but also                                                               
amend  it.    He  added  that   he  never  would  have  told  the                                                               
legislature it couldn't amend a law that was passed.                                                                            
                                                                                                                                
SENATOR  GREEN   brought  up  hindsight  and   surmised  Governor                                                               
Knowles' idea of negotiating must have been after 1996 and 1997.                                                                
                                                                                                                                
GOVERNOR KNOWLES acknowledged that congenially.                                                                                 
                                                                                                                                
4:24:27 PM                                                                                                                    
GOVERNOR KNOWLES  closed by thanking legislators  for their work.                                                               
He said when  people look back later, the  political nuances will                                                               
have long since  faded.  They'll want to know  what the state did                                                               
to take  advantage of a  great opportunity and whether,  right or                                                               
wrong, it  was a thoughtful position  that had little to  do with                                                               
politics and everything  to do with a  collaborative process that                                                               
reflects Alaska's unity.   He said he doesn't know  of anyone who                                                               
doesn't want  the project  to work,  though the  legislature will                                                               
have to sort through the different  ideas about how it would work                                                               
best.  He added that he believes it will work out.                                                                              
                                                                                                                                
4:26:11 PM                                                                                                                    
CHAIR HUGGINS  thanked Governor Knowles for  his past leadership,                                                               
noting  while they  are of  different  political persuasions,  he                                                               
believes the  approach of "lead, follow,  or get out of  the way"                                                               
has proven  itself in Alaska.   Saying both Governor  Knowles and                                                               
Governor  Hickel  want  to successfully  bring  Alaska's  gas  to                                                               
market, Chair  Huggins thanked them for  their continuing efforts                                                               
on behalf of the state.  SB 3001 and HB 3001 were held over.                                                                    
                                                                                                                                
There being  no further  business to  come before  the committee,                                                               
Chair Huggins  adjourned the Senate  Special Committee  on Energy                                                               
meeting at 4:27:44 PM.                                                                                                        

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