Legislature(2007 - 2008)BUTROVICH 205
01/28/2008 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| the Alaska Natural Gas Pipeline | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
January 28, 2008
3:35 p.m.
MEMBERS PRESENT
Senator Charlie Huggins, Chair
Senator Bert Stedman, Vice Chair
Senator Lyda Green
Senator Lesil McGuire
Senator Bill Wielechowski
Senator Thomas Wagoner
MEMBERS ABSENT
Senator Gary Stevens
OTHER LEGISLATORS PRESENT
Senator Joe Thomas
COMMITTEE CALENDAR
Drue Pearce, Federal Coordinator, Alaska Natural Gas
Transportation Projects
PREVIOUS COMMITTEE ACTION
No previous action to consider
WITNESS REGISTER
DRUE PEARCE, Federal Coordinator, Alaska Natural Gas
Transportation Projects
ACTION NARRATIVE
CHAIR CHARLIE HUGGINS called the Senate Resources Standing
Committee meeting to order at 3:35:51 PM. Present at the call to
order were Senators Stedman, Green, Wielechowski, McGuire,
Wagoner and Huggins.
3:37:23 PM
CHAIR HUGGINS reviewed Drue Pearce's resources background.
^The Alaska Natural Gas Pipeline
3:37:57 PM
DRUE PEARCE, Federal Coordinator, Alaska Natural Gas
Transportation Projects, presented a power point on the Alaska
natural gas pipeline. She said she would give them an idea of
the sort of cooperative efforts she would be leading as they all
work toward their mutual goal of commercializing Alaskan's North
Slope gas.
MS. PEARCE said the natural gas line project is unprecedented in
size and scope. A highway configuration is approximately 450
percent longer than the Trans Alaska Pipeline System (TAPS); it
has a couple of international boundary crossings that need
cross-border coordination. It's much bigger than a typical
large-diameter transmission pipeline and at the moment both the
AGIA applicant and the alternative ConocoPhillips proposal
contemplate building a 48-inch line that will be entirely buried
along much of the route (going through permafrost) except at
certain river crossings and in seismic hazard areas. The
pipeline project will go through three different provinces in
Canada: the Yukon, British Columbia and Alberta. The Alaskan
portion is a little less than 800 miles; the Canadian side is
even longer.
3:39:49 PM
She said the original federal legislation authorizing the gas
pipeline was passed in 1976 - even before the startup of TAPS in
1977. The entire project was not developed due to the high cost
of construction and the low price of gas.
MS. PEARCE said a pipeline was built under the old Alaska
Natural Gas Transportation Act (ANGTA); it was called the
prebuild and consisted of over 1500 miles of natural gas
pipeline bringing gas out of Alberta and the Alberta Hub to the
Lower 48. The Department of the Interior issued right-of-way
(ROW) to Northwest in 1980 and that is in existence today. The
present Alaska Natural Gas Transportation System (ANTGS) ROW is
owned exclusively by TransCanada.
The Alaska Natural Gas Pipeline Act of 2004 and 2007 Energy Bill
technical amendments brought her agency into existence. She
explained that the Energy Bill didn't go through Congress,
however, so the 2004 act was attached to a Department of Defense
appropriations bill, which worked. So the Office of the Federal
Coordinator (OFC) was created. It did a number of other things;
it says that the ANGTA certificate that is owned by TransCanada
continues to be valid; Congress reaffirmed that validity. It
also says that applications to build a pipeline can come under
the Natural Gas Act and those applications would come to Federal
Energy Regulatory Commission (FERC) for licensing. It bans the
over-the-top route that would connect our North Slope by
pipeline to the MacKenzie Delta pipeline and bring gas
presumably to the Lower 48. It confirmed the public need and the
downstream capacity; so an applicant doesn't have to reestablish
that. It authorized a loan guarantee program of up to $20
billion. It authorized an alternative construction study.
3:43:50 PM
It directed FERC to create open season rules, which it has
completed and promulgated. It names FERC as the lead
environmental agency if an application comes in under the
Natural Gas Act. The FERC would be the lead agency on the
Environmental Impact Statement (EIS) for National Environmental
Policy Act (NEPA). The EIS FERC would do also has to act as the
paperwork for all the other federal agencies to issue permits,
rights-of-way, their certificates or whatever each agency has to
do.
3:44:36 PM
Two amendments under the 2007 Energy bill, which just passed,
allow her office to run more easily. For one, it has a Title V
exemption for hiring federal employees. Her employees will get
all the benefits of federal employees, but they will be
considered to be administratively directed so when she hires
someone it can be just for a period of time. This is important
because the sort of expertise she will need during the
permitting phase will be very different from the expertise she
will need when doing inspections during the construction phase.
She sees her staffing peaking, going back down and peaking a
second time with the higher peak during the construction phase.
She also has reimbursement authority so contractors will pay the
costs that are directly attributable to their application.
3:46:21 PM
MS. PEARCE explained that the 2004 federal tax package had
accelerated depreciation for the pipeline, but not a gas
processing plant. However, it allows an enhanced oil recovery
tax credit for a gas processing plant that also produces CO2 for
reinjection into the fields.
MS. PEARCE said she was nominated for her position by the
President in June 2006 and the Senate acted quickly to confirm
her in August 2006. The Vice President swore her in and all the
old authorities of the Federal Inspector from the 1976
legislation came over with her.
3:48:11 PM
She said the Federal Coordinator ensures the expeditious
discharge and compliance of all related activities by federal
agencies. She has the power to prohibition certain terms and
conditions that agencies might try to put on the applicant. She
can also prohibit certain action by federal agencies.
The federal coordinator also has primary surveillance and
monitoring responsibility for the project on both federal and
private lands; and the legislation instructs her to have an MOU
with the State of Alaska (for state lands) so that they share
that primary surveillance and monitoring responsibility.
3:49:54 PM
MS. PEARCE explained that FERC as the lead agency will use a
pre-filing process to facilitate pre-application dialogue
between all the stakeholders, including permitting agencies.
It's particularly important that the federal coordinator insures
that the eventual applicant has a government-to-government
dialogue with the Tribes; so the president wrote an executive
order to insure that takes place.
One of her jobs is to mediate disagreements between state
agencies, federals agencies, between state and federal agencies,
between the applicant and the federal agencies or between
stakeholders and federal agencies. The idea is to fix problems
instead of letting them to drag out. "The whole point is to
expedite the process."
The Office of the Federal Coordinator will assist FERC in
insuring that the federal agencies expedite their reviews and
feed their information back to FERC so it can meet its 18-month
deadline. Two interagency agreements are already in place; one
coordinates NEPA and historic preservation reviews and the other
is a federal interagency MOU that was specific to the
implementation of this project that was signed in June 2006.
3:51:23 PM
She provided the committee with a list of all the federal
agencies involved in the project. Every agency has to issue a
permit, do a section 7 review, or issue a license or
certificate. They have all agreed to work cooperatively
together, but disagreements are expected and she hopes to be
able to mediate those.
3:52:11 PM
The federal interdepartmental MOU establishes a project
management framework for cooperation among participating
agencies with responsibilities related to the approval of an
Alaska Natural Gas Transportation Project. The agencies have
agreed by signing it to use their best efforts to achieve early
coordination and compliance with deadlines and procedures
established by the relevant agencies.
3:53:58 PM
She said she will be advertising for two new positions in her
D.C. office within the next 30 days - for a general counsel and
a chief engineer who will be head of the compliance and
permitting side of the office. She is not going to open an
Alaska office until she knows for a fact an application is
before the federal agencies. This office is funded in the 2009
budget.
In the federal legislation it is very clear that Congress
expected that there would be a pipeline that would bring gas
into the Lower 48, not an LNG project - because to land gas on
the West Coast, it would have to go either to the Canadian West
Coast or to Mexico. The US has no LNG terminals on the West
Coast and she said frankly, there is a huge question as to
whether one will ever get built there. She, her counterpart in
the Canadian government and Marty Rutherford (since she is head
of the pipeline team at the moment) have formed a senior
intergovernmental management team. They will help insure that
the coordination of all the agencies is in place to keep track
of the project and to provide a first-place to go for cross-
boundary questions. They have met once personally and once
telephonically and expect to meet at least monthly as the
project gets going.
MS. PEARCE said she has hired Howard Baker Jr., in her first
contract for the agency, to design a data management system.
They are reaching out to other federal agencies, ConocoPhillips
and TransCanada and state agencies to ask what sort of data
management programs they have and use to follow these huge
projects and stated:
We are trying to use the lessons learned when TAPS was
being built and insure that we don't create some of
the problems that the Joint Pipeline Office had in
trying to do the oversight that they need to do for
TAPS after it was built. Many records were lost and
they spent a number of years trying to recreate some
thing that should have been kept.
3:57:37 PM
She reported that the Argonne National Laboratory, that also did
the EIS for the TAPS right-of-way renewal, is working on a gap
analysis to cover the changes between now and the time the
original legislation was passed in 1976. She expects to have a
draft of the analysis by next month so her office can work on
the gaps before they are hit with the actual permitting of a
pipeline. She said their website address is
htt://www.arcticgas.gov.
If the federal agencies want to comment as part of the public
comment period on the AGIA, she would review them for inter
agency consistency, but not to change them.
MS. PEARCE said the state team met with many of the federal
agencies last week in Washington D.C. and talked about specific
questions it had, but the agencies were told they could comment
on any aspect of the application.
4:00:05 PM
MS. PEARCE said she hadn't begun a review of the ConocoPhillips
proposal, but said, "However, I believe that ConocoPhillips may
ask us to do a review of their proposal and if they do, we will
coordinate the same for them."
4:00:26 PM
SENATOR WAGONER asked if she would post the comments from the
federal agencies on her website as they come in or wait until
they are all in before posting them.
MS. PEARCE replied they will actually come the state and the
state is posting all of the comments. She suspected her office
would post them as well.
CHAIR HUGGINS asked about applications in the plural.
MS. PEARCE replied that they agreed to review applications (in
the plural) long before November 30 before the state knew how
many it was going to get. When the state chose to move just one
forward to the next phase, it asked her to just comment on the
one.
CHAIR HUGGINS said given that another one is under appeal, did
she see that potentially changing.
MS. PEARCE replied that depends on what the state does. It had
asked her to comment on any applications that met the first
test. If they choose to bring another into the next phase, she
couldn't assume what they would do, but she would expect they
probably would. It could turn into applications.
4:02:08 PM
End of presentation
4:02:45 PM
SENATOR WIELECHOWSKI asked if she could share her thoughts on
whether or not the state is headed down the right track.
MS. PEARCE answered that the federal agencies she talked to when
the state team was in town said they were pleased the governor
was moving forward with a process. They were hopeful there would
be a positive solution and that an application would come
forward. There is a pent up interest in Congress and the
agencies to move this project forward. They are better prepared
at the federal level to get an application than anywhere else.
"They are ready to move."
SENATOR WIELECHOWSKI asked if she saw any problems with the pipe
line going through Canada.
MS. PEARCE replied she has been talking with Canadian officials
from Minister Prentice down to the folks at the National Energy
Board, their Environmental Agency, Natural Resources Canada, and
Canada Northern Affairs. They are dealing right now with trying
to get their Mackenzie pipeline built. They want MacKenzie to
come first; they have all said at one time or another that the
permitting of the Alaska pipeline would be an easier process
than what they have had on Mackenzie. They've learned a lot of
lessons about their joint review process and the previous and
the new chairman of the National Energy Board have both said
they don't plan to enter that sort of a process that has no
timelines again. They are cheering Alaska on and hoping they
also get an application for an Alaska pipeline coming through
Canada sometime soon. The provincial people are even more
excited about it because they want the off takes.
4:06:34 PM
SENATOR WAGONER asked why the feds wouldn't allow accelerated
depreciation for the gas treatment plant.
MS. PEARCE replied she didn't know; it was written at the time
Senator Murkowski was chairing the Senate Energy Committee. She
would find out.
4:07:16 PM
CHAIR HUGGINS asked what the parameters are of accelerated
depreciation.
MS. PEARCE said she didn't have that language with her, but she
offered to send it to him.
CHAIR HUGGINS asked if they should be aware of any other tax
provisions.
MS. PEARCE replied no.
CHAIR HUGGINS asked what the system is outside of accelerated
depreciation.
MS. PEARCE replied none that are unique to this project.
CHAIR HUGGINS asked her to comment on the loan guarantee
business based on requests coming from potential applicants.
MS. PEARCE responded that the Department of Energy has the
responsibility for doing the loan guarantee work, but only in
concert with Department of the Treasury and the Office of
Management and Budget.
4:09:15 PM
She gave an example of what happened after 911 and then related
where the Department of Energy is headed. After 911 Congress
authorized loan guarantees for the airlines. The conditional
approvals were done and those are well defined in regulation at
the Department of the Treasury. They continue to be a framework
with the conditions and precedence for those loan guarantees.
Seven airlines received conditional approvals; six were funded
and nine were turned down completely.
4:10:25 PM
In 2004 the Department of Energy was authorized to do loan
guarantees for major nuclear construction and power plants.
Regulations are now in place and they plan to use the same
criteria for pipelines. This language is posted on the
department's website. She commented that if you don't need money
it's real easy to get a loan and if you need money it's a lot
more difficult and the folks who protect the tax payers dollars
don't make loan guarantees easy to get. But it is authorized and
there are precedence and policies already in place.
4:12:10 PM
CHAIR HUGGINS asked about bridge shippers.
MS. PEARCE said there hasn't been that sort of request for loan
guarantee with the airlines. The Department of Energy hadn't had
any detailed discussions yet, because TransCanada had not talked
with them yet.
4:13:00 PM
SENATOR STEDMAN said one of the legislature's consultants
questioned whether TransCanada even complies with AGIA. That
will get sorted out over the next few months, but one of the
issues that comes up is the completion guarantees, cost overruns
and potential equity contributions in relation to the loan
guarantee requirements as they were initially set up. It appears
a substantial modification of the loan guarantees will be needed
assuming an entity like TransCanada will require them. He asked
for her thoughts on modifying the guarantees to possibly include
cost overruns.
MS. PEARCE replied that she didn't have a position on that. She
was confident the DOE would look at the loan guarantee portions
of the application and they would develop a position along with
the DOT and OMB.
4:15:04 PM
SENATOR STEDMAN stated that they were also trying to sort out
where the gas would go; would it go into Alberta and be consumed
in the oil sands or would it all end up in the continental
United States of some combination. It appears the loan guarantee
language says the transportation of natural gas from the Alaska
North Slope to the continental US. He asked if the loan
guarantees are needed and would TransCanada qualify.
MS. PEARCE replied that the loan guarantee is for a project that
delivers gas to the continental US, but the language is silent
in terms of does every single molecule have to go there.
Everyone recognizes that there will be a gas off take in Alaska
and that no matter who builds it, local Canadian communities
expect to have an opportunity to take gas off. She has never had
any Canadian from any level of government represent to her that
expected Alaska natural gas to be diverted to their oil sands.
Instead Mackenzie would probably provide a huge amount of gas
for that project or the oil sands will look at other types of
energy production. There has been talk of build a nuclear plant
in northern Alberta to provide the energy the oil sands need.
One of the reasons the Canadians want their project to come
first is that they want to supply their own petrochemical
industry and domestic need.
4:18:55 PM
SENATOR STEDMAN asked if she would help them out over the next
couple of months with how the oil sands would impact gas going
through to the Lower US. He asked her to educate them on her
role if they end up with competing interests - one in AGIA and
one outside AGIA. What position does it put her office in?
MS. PEARCE replied "I guess that's why our title says Natural
Gas Transportation Projects with an "s." The legislation is
silent, which means that any project that comes to the federal
government, they will work to expedite. They would have the same
responsibility under whichever of the laws it comes in under. If
there were two applications, they would work to expedite both.
Her office, FERC and BLM would not look forward to doing that.
This project, if built, will be the most expensive privately
financed construction project ever built in the world. It is
bigger than anything these agencies have dealt with.
4:21:54 PM
SENATOR WAGONER asked about the difference in open seasons of 18
months between the ConocoPhillips and TransCanada applications.
It seems if Transcanada has its open season and continues to
FERC, they will be 18 months ahead of ConocoPhillips. What cause
and effect does that have in D.C.?
MS. PEARCE answered ConocoPhillips' open season is not front
ended like TransCanada's, but no matter which one you look at
that, they both have "prefeed" application process which is
robust and that's the time when you go out in field to get
additional information, when you continue with your design, you
begin working with all the stakeholders. You begin your
permitting processes with the other agencies. She was told on
Friday by ConocoPhillips that they still do expect to go in the
field this year; most of their work is on state right-of-way
rather than federal land. But if they want to get on federal
right-of-way they will ask the BLM for temporary use permits. As
they begin engaging agencies, her office will begin to engage
both them and the agencies to ensure things move forward
smoothly. Either company, if both go forward, will do scoping
and begin reaching out to al the stakeholders. One of her fears
is how confusing it's going to be for the lack of capacity in
some of the more rural areas to try to figure out the daily
visit one day from TransCanada and the next day from
ConocoPhillips, but they will deal with it if they have to.
SENATOR WIELECHOWSKI asked if AGIA isn't successful, what would
the federal government do and is it an option.
4:25:14 PM
MS. PEARCE responded if the governor brings one application
forward to the legislature and the legislature votes yes, that
company is committed to moving forward. Without it, Congress
still might move forward more proactively to push getting a
pipeline built, particularly if we don't license and see more
LNG plants get built in the Lower 48.
4:27:10 PM
CHAIR HUGGINS said the Mackenzie pipeline is expected to deliver
just over 1 bcf and the oil sands will need more than 4 bcf if
they continue using natural gas to do the processing. Some
people have said the likelihood of our gas being the gap filler
in that being high.
MS. PEARCE said on that point, once an open season happens and
gas is nominated at a certain tariff to a destination, once FERC
licenses a pipeline to bring gas to a destination and
particularly once there is a loan guarantee in place, the
shipper will be committed to sending that gas to the end of the
pipe wherever that is. A loan guarantee cannot be used for gas
that is taken off at the Canadian oil sands, but she hasn't
talked to a single Canadian who has told her that it will be
used there. Also, she pointed out that would be an export
project and FERC doesn't license those.
4:29:29 PM
CHAIR HUGGINS said when he was in Canada, he was told by
Canadian that they could use Alaska's gas. There was also a lot
of skepticism on whether Mackenzie would ever happen or not. He
asked what the climate is in D.C. when someone talks about
exporting Alaskan gas.
MS. PEARCE replied none of the secretaries opined that Congress
did not intend for Alaska gas to be exported to the Pacific Rim,
but rather to the Lower 48.
4:31:16 PM
SENATOR WAGONER said he heard Canada needs Alaskan gas, but they
need it to fill the capacity of the lines going into the US from
Canada, because by the time our gas flows in 2018, they are
going to have more than enough capacity to ship it on through.
They need it now to hold down their tariff rates. They really
need our ethanes for the Nova Plant.
MS. PEARCE said TransCanada has made it clear that they want
Alaska gas to put into the prebuild system and they believe they
might have to expand that prebuild which would give them even
more capacity by 2018 so they would be able to take all of that
gas to the Lower 48. The ConocoPhillips' proposal talked about
bringing gas to the Alberta hub at which time they would either
build a pipeline or look at using capacity that was already in
place.
4:33:00 PM
SENATOR WIELECHOWSKI said the US Attorney General recommended
that the pipeline should be built by an independent company. He
asked how that factors into any decision to consider
ConocoPhillips or any other producer for that matter.
MS. PEARCE replied that a 1977 decision by President Carter
explicitly prohibited the producers from owning any portion of
the pipeline project. When President Reagan was elected he
amended the decision to say if a pipeline were going to be built
with Federal Trade Commission, FERC and Justice Department
approval, that the producers could own a portion of it. That is
what is in currently in place in ANGTA. Further, she said,
several Alaska House members wrote a letter to then chairman of
FERC asking whether FERC would license a pipeline entity that
was producer-owned. FERC answered that was a question and they
would have to look at it when an application is before them.
CHAIR HUGGINS asked if she has a Canadian counterpart.
MS. PEARCE replied that Premier Harper "gave the files" for the
Mackenzie and Alaska pipelines to Minister Jim Prentice.
Minister Prentice at the time was Minister of Northern Affairs
Canada and had all of the aboriginal files and worked with the
territories. The Harper government went through a shake up and
Minister Prentice is now the Minister of Industry, like our
Secretary of Commerce. He retained those two pipeline files and
he is her counterpart. He has delegated the day-to-day and
month-to-month oversight of the Canadian side to the Ministry of
Natural Resources Canada and because of some additional shuffled
they are between people.
Canada had the Northern Pipeline Act and people had
responsibilities under that and they now have those same
responsibilities under a NEB authorized process. So basically
she deals with the same people no matter which process the
government chooses. She has met four times with Minister
Prentice and they are looking forward to being cooperative. They
are working with the Argonne folks on the gap analysis.
CHAIR HUGGINS asked if she has a timeline for Canadian issues.
MS. PEARCE replied the FERC has a timeline it has provided to
Congress as part of the report it does every six months. The
data management process will create the system by which the
massive timelines will be delineated.
4:40:12 PM
CHAIR HUGGINS recalled that TransCanada's goal was to have an
open season in 18 months, but not if they didn't receive some
assurances that it would be successful. He asked if she
understood that also.
MS. PEARCE answered that her discussions have been with
TransCanada's D.C. representatives who have been unequivocal
about going to open season in 2009.
4:41:21 PM
CHAIR HUGGINS said Texas has a pilot project to see how
sequestering CO2 would work and he asked if she saw any concerns
in D.C. about emerging environmental trends.
MS. PEARCE replied no. Most discussions on commercializing North
Slope natural gas have been supported by the environmental
community, the labor community and industry. Those discussions
haven't reached them yet. Alaska has 35 tcf of known reserves,
but the project needs 50 tcf. So an additional 15 tcf of gas
needs to be found to make the project feasible. That is becoming
more problematic as more areas are taken off the table in terms
of leasing.
4:43:17 PM
She said the Ninth Circuit stopped exploration in the Beaufort
last summer and the MMS is hoping to have a lease sale on
February 6. She didn't know whether a lawsuit would be filed to
stop it. The BLM has a sale projected for NPRA for some time
this calendar year, but the EIS was held up because of lawsuits.
This is where the environmental discussions take place.
4:43:50 PM
SENATOR MCGUIRE asked if AGIA prescribes what she has to do on
the federal level to analyze applications or is she allowed
under 2004 federal law to consider applications like
ConocoPhillips'.
4:45:00 PM
MS. PEARCE replied that she has not only the authority, but also
the direction to expedite any application that comes in on the
federal side. ConocoPhillips told her Friday they were
considering whether or not to ask the federal agencies to
comment back to them on their proposal. Once she has a request
she will talk to her attorneys and figure out the best way to
accommodate the "potential applicant." She said the state's
request to comment on applications came shortly after the RFA
went out; so the administration didn't have any idea how many
applications it would get.
4:46:05 PM
SENATOR MCGUIRE said she would hate to have the appearance of
two processes moving forward at the same time. Secondly, she
asked how Ms. Pearce saw Canada and the US working together to
get gas to the Lower 48.
MS. PEARCE answered that a number of cross-border projects are
happening. FERC licenses cross-border gas pipelines and the
state department does the environmental impact statements for
cross-border oil pipelines. They hadn't done one for many years
and suddenly had two applications. The Department of
Transportation and the Pipeline and Hazardous Materials Safety
Administration has done a new study with the NEB working on
consistent standards for both oil and gas pipelines. That kind
of cooperation is ongoing. FERC has an MOU with the NEB that has
a relationship with its counterparts in both Canada and Mexico;
the three countries meet at least three times a year to discuss
cross-border trans-boundary projects, demand and supply.
So, while Alaskans are new at cross-border work in terms of
major pipelines, the country is not. The Canadians are our
largest foreign trade partner when it comes to energy. Congress
intended through creating the Office of the Federal Coordinator
to expedite commercialization of North Slope gas as part of the
president's national energy plan. Congress believes in it on
both sides of the aisle. She clarified, "But not only do they
not intend and expect the gas to go to the Pacific Rim, they
didn't expect that is was going to get high-jacked in Canada."
SENATOR STEDMAN said he was more concerned about the state's
revenue stream. He asked for a range of what she felt would be a
reasonable expense to go to a successful open season.
MS. PEARCE answered she didn't have a figure.
SENATOR STEDMAN asked what would be a reasonable expenditure
range to get to a successful open season so they can take that
into consideration when looking at proposals.
MS. PEARCE responded that she would be happy to ask the chair of
FERC whether it had any statistics on costs to complete open
seasons that would somehow be comparable.
4:52:49 PM
SENATOR WIELECHOWSKI asked if she saw her agency or any in the
federal government being proactive to insure a successful open
season.
MS. PEARCE answered she didn't know what her agency could do;
the state is the one that holds the royalty gas. But FERC would
work with everyone to make sure the process is correct.
SENATOR WIELECHOWSKI asked if an open season fails what would
the D.C. reaction be.
MS. PEARCE replied that there would probably be a lot of
questions about why gas wasn't nominated. The Energy Committee
wants to know where their pipeline is; their expectation was
they were doing their part and this project was going to move
forward. There is a pent up anxiety about getting it built.
SENATOR WAGONER said it's important to remember there is only 35
tcf of proven gas reserves on the North Slope today, but those
are a result of oil exploration not gas. The first wells for gas
are getting drilled now and Anadarko already knows they have
some where they are drilling.
MS. PEARCE said the MMS estimates 200 tcf of reserves.
4:56:23 PM
CHAIR HUGGINS asked if D.C. skepticism about this project has
subsided since last year.
MS. PEARCE answered that there isn't a lot of knowledge in D.C.
about why it hasn't been seen yet. They know Alaska has a new
governor and a new process and they hope it works.
CHAIR HUGGINS said her boss would change, but she wouldn't and
he wanted to know if she had any political concerns in that
respect.
4:58:27 PM
MS. PEARCE said Congress is receptive and she has solid support
from both sides of the aisle. Her budget didn't get dinged. It's
looked at as a bi-partisan project.
5:00:38 PM
CHAIR HUGGINS asked what the D.C. reaction was to lack of
bidders under AGIA.
MS. PEARCE answered every point on the timeline has moved the
ball forward a little bit and increased the momentum of the
project. Keeping the ball moving is important. There aren't a
huge number of companies that know how to do business in Alaska
or build a project here.
5:02:38 PM
CHAIR HUGGINS asked if she talked with MidAmerican who even
wrote about why they didn't apply.
MS. PEARCE replied no. She said she spends a lot of time in the
Lower 48 educating consumers about the project because it's not
just an Alaskan project, it is an American project and they are
ultimately the largest beneficiaries. She urged the committee
members to talk to members from the other states when they go to
their national meeting to keep the momentum going.
CHAIR HUGGINS thanked her for joining the committee today and
adjourned the meeting at 5:06:23 PM.
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