Legislature(2011 - 2012)Anch LIO Conf Rm
08/17/2011 09:00 AM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| Presentation: Office of the Federal Pipeline Coordinator | |
| Presentation: Alaska Gasline Port Authority | |
| Presentation: Dynamic Capital Management, Inc. | |
| Presentation: Alaska Natural Gas Development Authority | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
August 17, 2011
9:01 a.m.
MEMBERS PRESENT
Senator Joe Paskvan, Co-Chair
Senator Thomas Wagoner, Co-Chair
Senator Bert Stedman
Senator Gary Stevens
Senator Hollis French
MEMBERS ABSENT
Senator Lesil McGuire
Senator Bill Wielechowski, Vice-Chair
OTHER LEGISLATORS PRESENT
Senator Fred Dyson
Representative Hawker
Representative Les Gara
Representative Chris Tuck - online
Representative David Guttenberg - online
COMMITTEE CALENDAR
Presentation: Federal Pipeline Coordinator's Office
- HEARD
Presentation: Alaska Gasline Port Authority
- HEARD
Presentation: Dynamic Capital Management, Inc.
- HEARD
Presentation: Alaska Natural Gas Development Authority
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record.
WITNESS REGISTER
LARRY PERSILY, Federal Coordinator
Alaska Natural Gas Transportation Projects
Washington D.C.
POSITION STATEMENT: Discussed the permitting process for the gas
pipeline to the Lower 48, the fieldwork that is underway,
financing, AGIA, markets in the Lower 48 and markets in Asia for
LNG.
BILL WALKER, Manager and General Attorney
Alaska Gasline Port Authority
Anchorage, AK
POSITION STATEMENT: Offered AGPA perspective regarding an Alaska
gas pipeline project.
DAVID GOTTSTEIN, President
Dynamic Capital Management, Inc.
Anchorage, AK
POSITION STATEMENT: Offered suggestions regarding an Alaska gas
pipeline project.
Harold Heinze, Chief Executive Officer
Alaska Natural Gas Development Authority
Anchorage, AK
POSITION STATEMENT: Presented the ANGDA perspective on the gas
pipeline.
MARY ANN PEASE, owner
MAP Consulting, LLC.
Anchorage, AK
POSITION STATEMENT: Discussed LNG conversion to propane and
transport as it related to the gas pipeline.
MALCOLM ROBERTS, representing himself
Anchorage, AK
POSITION STATEMENT: Offered his views on "owner state" concept
as it related to the gas pipeline.
DOUGLAS GIBSON, representing himself
Eagle River, AK
POSITION STATEMENT: Offered his views on energy and the gas
pipeline.
JOE GRIFFITH, General Manager
Matanuska Electric Association and
President
ARCTEC -The Railbelt G & T
POSITION STATEMENT: Discussed MEA's critical need for a
reasonably priced natural gas supply.
ROGER PEARSON, representing himself
Kenai, AK
POSITION STATEMENT:
BILL WARREN, representing himself
Nikiski, AK
POSITION STATEMENT:
GEORGE PIERCE, representing himself
Kasilof, AK
POSITION STATEMENT:
LYNN WILLIS, representing himself
Eagle River, AK
POSITION STATEMENT:
KAYE LAUGHLIN
Laughlin Co.
Eagle River, AK
POSITION STATEMENT:
TONY IZZO, representing himself
Anchorage, AK
POSITION STATEMENT:
JERRY MCCUTCHEON, representing himself
Anchorage, AK
POSITION STATEMENT: Testified as to the realities of a gas
pipeline.
PAUL KENDALL, representing himself
Anchorage, AK
POSITION STATEMENT:
ACTION NARRATIVE
9:01:42 AM
CO-CHAIR JOE PASKVAN called the Senate Resources Standing
Committee meeting to order at 9:01 a.m. Present at the call to
order were Senators Stevens, French, Stedman, Co-Chair Wagoner,
and Paskvan.
^Presentation: Office of the Federal Pipeline Coordinator
PRESENTATION: Office of the FEDERAL PIPELINE COORDINATOR
CO-CHAIR PASKVAN announced the business before the committee was
to hear a presentation from Larry Persily.
9:02:26 AM
LARRY PERSILY, Federal Coordinator for Alaska Natural Gas
Transportation Projects, said he would discuss: the permitting
process for the gas pipeline to the Lower 48, fieldwork that was
underway, financing AGIA and markets in the Lower 48 and Asia
for LNG.
He explained that the 2004 law that created the Office of the
Federal Coordinator (OFC) gave it unique authority. If a federal
agency imposes a permit condition that goes beyond what is
required by law, and if it impairs the expeditious construction
of the project, the OFC has the authority to overrule the permit
condition. He related that the OFC was currently drafting permit
review policies that would probably be ready for comment in the
fall. Part of this process will be to define "expeditious
construction" since the enabling legislation did not do so. In
addition, a new web-based permit matrix will make it easier to
locate, for any federal permit that is required on this project,
the statutory site, the regulatory site, information on
scheduling and the data requirements. It will also be possible
to track the permit on a timeline. He noted that in an effort to
keep the public informed, the OFC two days ago issued a Guide to
Alaska Gas Projects.
MR. PERSILY reminded the committee that the federal loan
guarantee - which provides the accelerated depreciation for the
pipe, the investment tax credit for the gas treatment plant and
the authority of his office, was available only for a pipeline
that moves gas to the Lower 48. Those provisions of law do not
apply to an exclusive export project or an exclusive in-state
Alaska project. In 2004 the loan guarantee was set at $18
billion plus an inflation index that brings it to about $21
billion today. He noted that there was a proposal before
Congress to increase the federal loan guarantee to $30 billion
plus an inflation index, but that the current political climate
made action unlikely anytime soon.
MR. PERSILY displayed a map depicting the current major Canada-
U.S. gas pipelines and emphasized that the proposed pipeline
through Canada didn't have anything to do with Canada getting
Alaska's gas. Canada has an existing and well-developed gas
export pipeline system that has spare capacity now and in the
future. He emphasized that if Alaska can get its gas to northern
Alberta and connect into that existing network, it will be
possible to move it anywhere in North America.
9:07:09 AM
SENATOR STEDMAN asked if he could briefly discuss the treaty
between the U.S. and Canada related to gas import and export.
MR. PERSILY explained that the treaty for this project was
signed in 1977, and there was also the North American Free Trade
Act (NAFTA). These existing laws will allow the gas to move
freely from Alaska through Canada to the Lower 48. The approvals
that are required under NAFTA to send gas overseas are issued in
a matter of days as opposed to months for an export license
through the Department of Energy.
SENATOR STEDMAN asked if the original treaty for this project
provided for a free flow of gas back and forth across the border
that, in the end, was supposed to be a net zero loss or gain for
both countries.
MR. PERSILY said there was a provision that talked about some
payback if Canada ran short of gas, but Canada was not short of
gas, and the issue had not come up.
9:08:49 AM
MR. PERSILY displayed a timeline for the Alaska Pipeline Project
and explained that the Federal Energy Regulatory Commission
(FERC) will do the environmental impact statement (EIS) for the
project and make a determination on the Certificate of Public
Convenience and Necessity (CPNC). FERC started the EIS process
on August 1, 2011 when it issued a notice of intent, and made it
clear it was working on the Alberta option through Canada. While
there had been no definitive statement that the Valdez option
was off the table, this EIS will be looking at the Alberta
option to the Lower 48.
The project applicant in December will turn in 11 grant resource
reports dealing with all the baseline data for the EIS regarding
soils, water, hydrology, subsistence and socioeconomic factors.
FERC will start its public scoping sessions throughout Alaska in
January 2012. This year the TransCanada, ExxonMobil partnership
will spend a little more than $200 million on fieldwork. An
estimated $160 million will be reimbursed by the state under
AGIA, and $50 million will come from the companies. He display a
graph depicting the proposed TransCanada, ExxonMobil spending
and the state reimbursements through FY14 when the state's $500
million is expected to run out. Expenditures on fieldwork in
FY12 are the heaviest to date, and by the end of the fiscal year
the state will have reimbursed or encumbered about $300 million.
He noted that this engineering, design, and permitting work was
going on concurrent with the commercial negotiations with
potential shippers.
Returning to the timeline, Mr. Persily said federal and state
agencies have six weeks to review the resource reports and final
field work could be done in 2012. TransCanada, ExxonMobil are
scheduled to turn in the FERC application in October 2012. FERC
has 12 months to complete the draft EIS, an additional 6 months
for the final EIS and 2 months to make a decision on the CPNC.
Project sanction was estimated in 2015, construction starting in
2016 and first gas in 2020.
MR. PERSILY submitted that the engineering, design and
environmental work on this project were known quantities and
therefore relatively easy, whereas the politics and market
economics were more problematic. He said it's his opinion that
AGIA would never get to a pipeline by itself. It was simply a
path toward getting a building permit for a pipeline. AGIA
doesn't deal with fiscal terms, markets or financing. He drew an
analogy to a bare lot. Before it's possible to build a home on
that lot it's necessary to get a building permit, water and
sewer connections, zoning approval and financing. AGIA was the
method the state chose to get the building permit; it was an
initial step and more was needed to get a project. To get
financing the shippers have to be willing to take the risk that
they'll find enough new gas supply from the North Slope to keep
the pipe full to honor the long-term contracts they signed. It
was the shippers that would take the risk on market prices and
cost overruns on the project.
MR. PERSILY noted that the Ruby Pipeline had a 23 percent cost
overrun and the Rockies Express Pipeline had a significant cost
overrun. It's something that the shippers and pipeline sponsor
will have to deal with. It was also important to have state
fiscal terms that recognize the risks and make this project
attractive in a capital-constrained world. He said the decision
to build the project was a private-sector decision, but the
state can help with reasonable fiscal terms. He commented that
the Alaska Stranded Gas Development Act (ASGDA) wasn't a bad
concept, but it wasn't handled well and scared Alaskans away
from the notion of negotiating with the companies. He emphasized
that if there was going to be a project, Alaskans would have to
realize that negotiating can take many forms and wasn't
necessarily bad. For example, property taxes could be discussed.
Under state oil and gas property tax law, property taxes start
the first year. For the 4.5 billion cubic foot per day (bcf/day)
project, property tax up to first production will add up to
almost $1 billion. Other fiscal terms topics could include back-
end-loaded tax regime, deferrals and backstop protection on cost
overruns. It wasn't necessary to use the term "subsidy."
MR. PERSILY suggested that Alaskans look at this as a 50-year
project, and understand that there were a lot of opportunities
to collect money over that time. If the state reduced or
deferred the take on the first 10 or 20 tcf to allow a quicker
capital cost recovery, it would make the project more
attractive. The state could make it up and more on the next 50
or 60 tcf.
9:18:15 AM
MR. PERSILY said the in-state project - the Alaska Gasline
Development Corporation - faces many of the same problems as
AGIA on a smaller scale. But it was important to realize that it
was not a business competitor. Playing one project against the
other was not in the best interest of the state. The best
solution for the next 50 years was a big pipeline that provides
economies of scale, state revenues, a reason for companies to
spend tens of billions of dollars to find more gas and oil on
the North Slope to keep that line full and the opportunity to
tie in with an in-state pipeline to serve the Interior and as
far into the state as it can reach economically. Both federal
and state law requires mileage-based tariffs, meaning that
customers at the end of the line pay 98 percent of the gas
treatment plant (GTP) and pipe. Alaskans will only pay for the
portion of the pipe for the capacity and the number of miles
used in the state. That was the cheapest way to get gas to
Alaskans.
A gas pipeline will do more than anything else, in the near term
and possibly the long term, to put more oil into the Trans
Alaska Pipeline System (TAPS). Gas from Prudhoe Bay and Point
Thomson will keep the 4.5 bcf/day pipe filled for 13-15 years
after which there will be spare capacity. A producer that signed
a 20-25 year deal with that knowledge will start looking for new
discoveries right away, because the process to production can
take a decade. The incentive to look for new gas to keep the
line full means more oil will be found.
MR. PERSILY said the North Slope has been a very profitable oil-
only play for 35 years, but it probably won't continue so
companies have to be given the opportunity to market their gas
especially given the current offshore development in the
Beaufort and Chukchi seas. It doesn't make financial sense for
the state to make it a liability for companies to handle their
gas as opposed to something they can monetize. Having a gas line
makes all those investments more attractive.
9:21:46 AM
MR. PERSILY displayed a slide illustrating the discrepancy
between production and consumption. For example, 2010 data shows
that U.S. natural gas production climbed from 60 bcf/day in
January to a little more than 60 bcf/day at yearend, whereas
consumption in January was closer to 100 bcf/day. He then
displayed a map showing the locations of storage reservoirs
across the U.S. as of August 2007. He explained that in the past
couple of years, utility demand for natural gas increased
several bcf/day.
Utilities are moving from coal to gas because it's cleaner, more
certain and a better investment. For example, Project Energy, a
utility that serves North Carolina and South Carolina, was
phasing out 11 of its dirtiest coal plants by 2014; Tennessee
Valley Authority was shutting down 20 of its dirtiest coal
plants by 2018; and Wyoming, a huge coal state, will have its
very first gas-fired power plant on line in 2014. In the first
quarter of 2011, coal's share of power generation was the lowest
in 30 years. He commented that Michael Bloomberg's $50 million
philanthropic donation to the Sierra Club to fight coal-fired
power plants will help natural gas demand.
MR. PERSILY said coal will never die, but there was opportunity
for natural gas to capture growth. Credit Suisse recently
reported that almost half of the 340 gigawatt (GW) coal-fired
capacity in the U.S. did not have scrubbers. To bring those
plants to new emission standards would be very expensive, and a
lot of utilities deem the investment not worthwhile. There was
further opportunity for natural gas because one-third of U.S.
coal-fired power plant capacity was more than 40 years old. If
the trend away from coal continues, the U.S. will need a lot
more natural gas.
He reminded the committee that the Western Canadian Sedimentary
Basin was in decline just like the mature gas fields of Prudhoe
Bay. In 2001, Alberta conventional gas production was 14.2
bcf/day, and was projected to be just 7.7 bcf/day in 2018. Shale
gas will make up a lot of the decline in conventional
production, but the question was if in 20-40 years it would
cover both the decline in production from conventional fields
and the increase in demand. Clearly, if Alaska gas can be priced
competitively, it should have a place in the market.
MR. PERSILY emphasized that while Alaskans have long been
fixated on the price of oil, today's price of natural gas
doesn't matter for this project. The question was what it will
be 10-30 years from now. He noted that Reuters this spring
surveyed 27 oil and gas industry analysts and the consensus was
that in 2013 the price of gas would be $5.40. Goldman Sachs
predicts that gas will be $6 by 2015. While nobody knows what it
really will be, the expectation is that the worst is over as
demand builds.
He said shale gas production was growing, but hydraulic
fracturing and wastewater handling were driving the public
debate. Noting that public policy was often made by emotions, he
said that industry has been using hydraulic fracturing for
decades, but never before in suburban Pennsylvania. The
Department of Interior was reviewing the rules for hydraulic
fracturing on public lands, the EPA was reviewing the rules and
states were starting to regulate it. New York, Pennsylvania,
West Virginia, Arkansas, Texas and Wyoming had already imposed
new rules on hydraulic fracturing, drilling, and water disposal.
9:27:17 AM
CO-CHAIR PASKVAN recognized that Representative Les Gara had
joined the meeting and Representative Chris Tuck was attending
via teleconference.
MR. PERSILY said wastewater has become a contentious issue and
Pennsylvania, for example, said it can no longer be run through
water treatment plants. He noted that in a sign of the times, a
San Francisco-based law firm set up a special 13-member team to
handle the defense work on fracking cases against drilling
companies. He cautioned that shale, too, will have problems and
the question was if a utility will be willing to bet everything
on shale for decades to come.
MR. PERSILY warned that Alaska wasn't going to get filth rich on
gas like it on oil. Although the future was bright, expectations
have to match the economic reality. He noted that an anonymous
reader recently posted a factually inaccurate comment on the
Anchorage Daily News (ADN) website. The reader calculated that
the state could make just under $1 billion a year from the 4.5
bcf/day gas line, and called it "chump change for Alaska."
9:30:10 AM
CO-CHAIR PASKVAN called a brief at ease from 9:30:10 a.m. to
9:30:47 a.m. to deal with phone interference.
MR. PERSILY stated that, regardless of that reader's sentiment,
a deal for a 4.5 bcf/day gas line that puts $1 billion net in
the state treasury every year in addition to creating jobs,
bringing affordable gas to Alaskans for decades, and providing
the necessity for tens of billions of dollars in new oil and gas
investment was worth signing. He suggested that Alaskans need to
look at the overall benefit when evaluating the project.
SENATOR STEDMAN pointed out that Alaska was different than other
states because it owns the natural resource. He continued that
he rather expects the legislature to look at a sliding scale
with some sort of progressivity because natural gas at $5 has
virtually no monetary value to the state treasury. It would be a
different ballgame if gas was priced at $10-15.
MR. PERSILY agreed that progressivity or some sliding scale made
sense, and that it also made sense to sign a deal even in the
current low price environment.
MR. PERSILY directed attention to a bar graph and said it was
important to look at the size of the market when considering
LNG. He explained that on an average day in 2010, North America
consumed nearly 82 bcf/day of gas, [66 bcf/day] of which was
consumed in the U.S. During that same timeframe, China consumed
10.54 bcf/day, Japan 9.14 bcf/day, India 6 bcf/day, South Korea
4.15 bcf/day and Taiwan 1.36 bcf/day. Prices are higher in Asia
because Japan long ago linked LNG to the price of oil to ensure
a steady supply. But with oil at $110 in the world market,
customers are eager to break that link. China, in particular,
doesn't like paying oil-linked prices for LNG, and several years
ago signed a big contract for $4 LNG from the Tangguh Project in
Indonesia. South Korea about a year ago paid about $11 per mcf
for its gas. He said LNG prices in Asia are volatile and just
because the spot prices in Asia are a little higher than $14 per
mcf (1,000 cubic feet) or 1 million Btus today, doesn't mean
they will be $14 tomorrow.
Also, production costs are significantly higher for LNG. The
Wood Mackenzie report for the AGPA estimated $4.40 per mcf for
liquefaction and gas loss during the process. That amount gets
added to the pipeline and gas treatment plant tariffs. For a
Valdez liquefaction plant that would produce 2.7 bcf/day, Wood
Mackenzie estimated that the capital costs would be about $24
billion. Adding that to the pipeline and gas treatment plant
pushes the project to $45-50 billion.
MR. PERSILY said it's important to remember that a 20-year
binding shipping commitment on a 4.5 bcf/day line to Alberta
from the North Slope, based on the open season numbers, would be
worth about $115 billion. A 20-year binding shipping commitment
on a 2.7 bcf/day line to Valdez, with liquefaction, would total
nearly $170 billion. The smaller line would also need a shipping
commitment, but the line would cost more and require more
financing.
With respect to the fiscal system, the Wood Mackenzie report
calculated that the net present value to the state through 2050
for the LNG project would be $124 billion, and the net present
value to the producers would be $24 billion. He questioned
whether a fiscal system that returns five times as much to the
state while the producers take all the risk would really attract
investment to build the project.
9:38:09 AM
SENATOR FRENCH asked what the net present values would be to the
state and producers for an overland route to Alberta.
MR. PERSILY replied he would follow up and supply the numbers.
SENATOR STEDMAN suggested the committee look more closely at the
Wood Mackenzie numbers to see how they're calculated and at what
price, because he was a little suspect of them.
MR. PERSILY agreed and added that gets to the issue of
decoupling and the treatment of oil and gas.
REPRESENTATIVE GARA reminded the committee that when Senator
Stedman several years ago introduced legislation to tax gas at
the same 25 percent rate as oil, the administration rewrote the
regulations that defined what portion of the oil tax was a gas
tax. He asked if those regulations had any effect on producers
being willing to put gas in the pipe.
MR. PERSILY responded he wasn't familiar with the
administration's regulations, but the point was that gas is not
as profitable as oil. In the current price environment, less
than 10 percent of the value of a barrel of oil goes to
transportation costs but, if the open season numbers are
correct, three-fourths of the value of gas will go to
transportation costs. Because of cost overruns and other issues,
what to do with gas has to be addressed on a larger scale than
just regulations.
9:40:53 AM
He displayed a graph depicting the average daily Asian LNG
imports for 2010 and noted that combined imports for Japan,
South Korea, Taiwan, China and India add up to about one-fifth
of the North American market. Although it wouldn't be impossible
to sell into the Asian market, this illustrates that it is much
smaller market. Responding to a question from Senator French, he
explained that the average daily consumption for North America
and the U.S. were included at the top of the Asia LNG import
graph to give some perspective.
A line graph showing China production and consumption rates
between 2000 and 2010 illustrates that LNG imports increased in
just the last few years. Then imports doubled from July 2010 to
July 2011, with most of the gas coming via the new $22 billion,
3 bcf/day pipeline from Turkmenistan. China also has shale gas -
conceivably as much as the U.S. - and the U.S. government has
agreed to help develop it. Because China has options, it will
buy what's cheapest to meet increasing demand.
9:43:26 AM
CO-CHAIR PASKVAN recognized that Representative Max Guttenberg
had joined the committee via teleconference.
MR. PERSILY noted that Japan was currently buying about 1
bcf/day of LNG because most of its nuclear capacity was shut in,
but last month electrical demand was down more than 8 percent
from one year ago. While Japan was buying more LNG, people were
using less so it wasn't all translating into direct LNG sales.
He explained that in 2008, total global LNG export capacity was
27.5 bcf/day. Since then about 18 bcf of new capacity was
operating, under construction or committed, and more projects
were on track for final investment decisions this year. He
emphasized that to make the economics look at all attractive for
an Alaska LNG line, it was important to get to full capacity as
soon as possible.
9:46:41 AM
In conclusion, Mr. Persily stated that Alaskans need to realize
how much the state needs a gas line and that it will take a
long-term stable fiscal deal with the producers to get them to
put up the money to build it. It's a tough but not impossible
environment, he stated.
CO-CHAIR PASKVAN asked if he had any comments on the
presentations that Mr. Palmer and Mr. Fauske delivered earlier
in the week.
MR. PERSILY responded that the Alaska Gasline Development
Corporation, which Dan Fauske heads, has done a good job
presenting information on an in-state line. However, he would
suggest that it's time to stop thinking of an in-state versus a
big line and instead consider how to put them together. The big
line doesn't get gas to Fairbanks or Southcentral and the
economics aren't attractive for the in-state line. If the state
is willing to commit billions of dollars for .5 bcf/day, why not
sit down with the producers to see if that money could be
leveraged to get both lines. That would result in public
revenues and the cheapest gas because of the mileage-based
tariffs and economies of scale for a big line.
MR. PERSILY opined that Mr. Palmer was in a tough position.
Companies that bid for gas capacity require that the information
they submit be held confidential. The state will get information
after the agreements are signed and the FERC process begins, and
the question is whether to wait for the agreements before
starting to talk fiscal terms or to engage the companies in
fiscal term talks now. Because the state is more anxious to know
its future than the companies, it is more incumbent on the state
to push the schedule along and start fiscal talks. This should
include educating Alaskans as to the issues. Those discussions
need to start now.
9:51:00 AM
SENATOR STEVENS asked how much fear he has that TAPS is on the
way out.
MR. PERSILY replied he didn't have much fear of that in his
lifetime. TAPS is currently moving a little more than 600
barrels/day, and the Alyeska flow through report for this year
said that with mitigation it could deal with flow rates as low
as 350,000 bbl/day. There is a cost attached to low flow rates,
but the mitigation is affordable when Alaska North Slope oil is
selling at more than $100 a barrel. It's a lot less than the 2
million barrels per day in 1988, but 350,000 bbl/day is still a
lot of oil and at $100 a barrel it's worth finding a way to keep
it going. However, TAPS does need more production and the best
way to do that is to turn Alaska into both an oil and gas
province.
9:53:04 AM
REPRESENTATIVE HAWKER recalled that about a year ago Mr. Persily
expressed concern about the merchantability of the project if
TransCanada didn't have the open season results within a year of
the announcement, and yesterday Mr. Palmer acknowledged that
TransCanada was behind its own timeline in moving the
demonstration of economic viability forward. He asked how
legislators should incorporate his counsel about considering a
certain timeframe and if they should embark on a feedback loop
to reevaluate decisions up to this point and figure out the best
route forward.
MR. PERSILY replied the context of his comment last December
that "it would be bad not to have something a year from now"
wasn't that it would be bad for the project, but that it would
be bad for public opinion. Unfortunately, public opinion in
Alaska already is tending toward the notion that it won't
happen. That's worrisome because it makes it more likely that
the public will turn to other less-attractive options. What some
people don't appreciate is that it is not TransCanada's
responsibility to make the project financially viable or to
negotiate with the producers. Through AGIA, TransCanada can lay
out the process but nothing he's seen so far indicates they
won't end up with the FERC certificate. To get value from it is
in the state's lap.
9:58:21 AM
REPRESENTATIVE HAWKER summarized that the state doesn't have a
viable project today and probably won't until it sits down and
negotiates with the producers. He asked if the fiscal regime was
the single greatest point of negotiation, and what the
legislature can do next session to give TransCanada the
opportunity to develop a viable economic project.
MR. PERSILY countered that he believes the project is very
viable, but there were two hurtles to overcome: fiscal terms and
the market. The state can't do much about gas markets, but it
can affect fiscal terms. To get someone to sign $115 billion of
shipping commitments and write the checks for construction
there, has to be a fiscal deal between the state and the
producers.
10:00:11 AM
CO-CHAIR PASKVAN asked if he would comment on the anticipated
settlement of the Pt. Thomson unit and what it potentially means
for long-term gas purchase agreements.
MR. PERSILY replied it was his understanding that it would be
too risky for a company to sign a 20-25 year shipping contract
if Pt. Thomson wasn't added to the mix. It ensures 13-15 years
of full capacity and that provides time for additional
exploration. To have a big line it's essential to have the
additional reserves from Pt. Thomson that can be committed, he
stated.
CO-CHAIR WAGONER recalled that when AGIA was put out there was a
lot of pushback on the "must haves" that were listed. He asked
if that list was an additional hurtle or if the issue went away
when TransCanada signed the contract.
MR. PERSILY opined that some of the issues in the AGIA statutes
would likely be back on the table when the state sits down with
the producers. He highlighted that rolled in tariffs for
expansion were still of concern to producers.
CO-CHAIR WAGONER asked his opinion on booking reserves, when
that can be done and if there has to be a pipeline so that the
reserves are no longer stranded.
MR. PERSILY replied the Securities and Exchange Commission (SEC)
talks about reasonable expectation of production and it would be
hard to argue that there was a reasonable expectation without a
contract or plans for a pipeline. The SEC recently subpoenaed
two small natural gas producers regarding their claims of shale
gas reserves and production so the issue is garnering more SEC
attention because booking more reserves increases stock prices.
He offered to follow up with more information from the SEC.
10:04:14 AM
SENATOR FRENCH asked if anything about the AGIA framework needed
to be redone in order to get the project built.
MR. PERSILY responded two provisions come to mind. One is the
statute that says if a company commits gas in the first open
season the state will give it the production tax rate that was
in then. The other is the notion of rolled in tariffs.
SENATOR FRENCH asked him to highlight the pros and cons of 1)
the all-Alaska line to Valdez and 2) the hub to Fairbanks.
MR. PERSILY said both projects face the need for fiscal terms
with the producers - companies willing to sign long-term
shipping contracts. What they don't have in common is the market
they're going for. It's cheaper to get gas to the Lower 48 and
that market is larger than Asian LNG. Among other issues,
exporting to non-free trade nations like China, Japan and India
will require a Department of Energy license, which may or may
not be a problem.
SENATOR FRENCH noted the persistent disagreement between the two
parties as to whether there was currently a valid export
license, and asked what it would take to get one if, in fact,
there wasn't one.
MR. PERSILY explained that Yukon Pacific had a FERC certificate
for a liquefaction plant at Valdez that was rescinded last year;
state right-of-way permits that were taken back a couple of
years ago; and earlier this year the company notified the Bureau
of Land Management that it was going to relinquish its federal
right-of-way permit for the Valdez route. Yukon Pacific still
has a valid Department of Energy (DOE) export license from
Valdez that has never been used. The question is if that license
is transferrable and if the DOE would honor it. He said DOE
hasn't been asked for an official opinion, but he wouldn't bet
on it.
SENATOR FRENCH asked if that project would need licenses from
both FERC and DOE.
MR. PERSILY explained that the FERC certificate would be needed
for the construction and operation of the liquefaction plant and
a Department of Energy license was needed to export gas. He
restated his belief that it wouldn't be easy to transfer the
Yukon Pacific license to another company, because too much had
changed in two decades.
10:08:26 AM
SENATOR DYSON asked what affect Shell's exploration in the
Beaufort and Chukchi seas might have on the Alaska Highway
pipeline.
MR. PERSILY replied any new gas supply will help to make either
project much more attractive.
SENATOR DYSON asked him to expand on what Shell's prospects
might do to the economics of Alaska and the nation.
MR. PERSILY said he wasn't familiar with Shell's production
estimates, but to keep in mind that no company would want to
withdraw gas the first year if in doing so they lose the chance
to recover a lot of valuable oil.
SENATOR DYSON noted the escalator clause in ACES and asked if he
was familiar with any royalty regimes that had something
similar.
MR. PERSILY responded that everyone uses a different regime;
there was no standard worldwide. Alaska uses production tax,
royalty, and property tax, and Alberta uses just royalty. To
encourage more investment, that province reduces the royalty in
the early years and then ramps it up in later years. He
continued that he believes that in Alaska the term "fiscal
certainty" has become as toxic as "negotiations" and "Stranded
Gas Act." The producers are realistic and realize that there is
no such thing as "fiscal certainty," but they do need reasonable
fiscal terms. Short a constitutional amendment, it's difficult
to lock in "fiscal certainties."
SENATOR DYSON asked if royalties didn't fall under contract law.
MR. PERSILY agreed that royalty is a contract as opposed to a
tax rate that's set by statute. He added that that would
probably be one place to look.
10:13:23 AM
SENATOR STEDMAN commented that, contrary to media implication,
Exxon was not an AGIA signatory.
MR. PERSILY agreed; the AGIA license was only with TransCanada.
Exxon was not a signatory, but it did join TransCanada to work
on the Alaska Pipeline Project venture.
REPRESENTATIVE GARA stated his belief that the big pipeline was
clearly the best project for the next generation of Alaskans,
and that he was committed to making it work. It will generate
revenue, produce cheaper gas for people who are able to access
it in-state, and encourage more exploration for both oil and
gas. To that end, he questioned whether it was time to consider
partial state ownership in order to reduce the tariff some and
make the economics more attractive.
MR. PERSILY agreed that a big line would be more beneficial to
the state, but that the only way to get gas for Alaskans from a
big line was to work with some other entity to get a smaller in-
state distribution line built. Neither TransCanada nor the major
producers were in the gas distribution business and none of them
were looking at a smaller in-state line to Fairbanks and
Southcentral.
Responding to the question, he said partial state ownership was
one way to reduce the tariff, and it might increase the
attractiveness of the project, but there were probably better
ways to do it. Using production tax and royalty would avoid the
risk of being an owner and the conflict of simultaneously being
a regulator and owner.
REPRESENTATIVE GARA observed that the state and the oil
companies each have a nuclear option. The oil companies can say
they won't put gas in the pipeline unless they get the lowest
tax rate possible, and the state can use the duty-to-produce
argument and potentially cancel leases. He asked about the
likelihood of the state and oil companies using these options.
MR. PERSILY said he rejects both nuclear options because neither
will get a pipeline for Alaskans for the future. Going to court
and betting the state's future on the untested legal theory of
duty-to-produce when they really are producing hydrocarbons from
leases was not a smart option.
REPRESENTATIVE GARA mentioned the concern about running out of
gas in Cook Inlet and asked when it might be time to pull the
plug on the big line and ensure the supply of in-state gas by
looking at other, albeit more expensive, options.
MR. PERSILY responded he had no idea how much gas will come out
of Cook Inlet any more than what the Henry Hub price of gas will
be in one or ten years, but Cook Inlet shouldn't drive the
decision on the big line. It was the wrong factor to consider
because no pipeline can get gas into Southcentral before the end
of the decade. With respect to the statement that the producers
want the lowest tax rate possible, he warned that if the state
is able to come up with fiscal terms that work, it will be much
more complex than just changing the tax rate. Capital cost
recovery, reducing risk in the early years and dealing with
price uncertainty will all factor in as opposed to just a debate
on a PPT/ACES tax rate.
10:21:49 AM
REPRESENTATIVE HAWKER highlighted that AGIA was a standalone
free-market project while the Alaska Gasline Development
Corporation (AGDC) project was more on the order of a public
utility investment in infrastructure that has a shorter
timeline. He asked how and in what manner the two projects could
be brought together.
10:26:48 AM
MR. PERSILY responded that they've got to be designed, built,
coordinated and planned together so they come on at the same
time. If there is going to be a big line, there has to be a way
to get gas to Alaskans. That will be an in-state project and
will take some financial participation from the state because of
the small demand. In 1977 when Congress passed the Alaska
Natural Gas Transportation Act, there was a federal prohibition
against producer equity investment in the Alaska Gas Pipeline,
but that law was later changed to allow the producers to take an
equity stake in the pipeline. As to whether the project was
viable or stranded, he said that any project of this size will
have to have some government participation, because there was
just too much risk otherwise. He restated the importance of
making a good-faith effort to do the two projects together.
10:30:20 AM
SENATOR DYSON noted the concern in North America about the major
players controlling pipelines and that it seems that FERC
favored independent ownership. He asked Mr. Persily if he meant
to infer that allowing the major producers to own and operate
the pipe would make the project more attractive and therefore
improve its chances.
MR. PERSILY answered no; just that they have the kind of
checkbooks that are needed for this sort of project. He added
that gas and oil are different commodities, there are distinct
sets of laws governing the two pipelines, and it wouldn't be
good public policy to try to get even on the gas pipeline for
perceived losses on the oil pipeline.
SENATOR DYSON asked what federal law says about owner/operators
for the big pipeline.
MR. PERSILY replied there was no restriction, but FERC had some
very tough firewalls that exist in statute that prohibit the
exchange of information between, for example, Exxon the pipe
company and Exxon the producer. Those firewalls are sufficiently
secure and in Alaska's best interest.
10:32:53 AM
CO-CHAIR PASKVAN said Alaskans are interested in where their
energy is going to come from and what it will cost. Hopefully at
the end of the day we as policy makers can make decisions to
distribute natural gas to as many Alaskans as possible and to
use oil to increase the treasury to help the other parts of
Alaska that aren't immediately accessible to the natural gas. He
thanked Mr. Persily for his participation.
10:34:39 AM
CO-CHAIR PASKVAN recessed the meeting.
10:50:42 AM
CO-CHAIR PASKVAN reconvened the meeting and noted that Bill
Walker, David Gottstein, and Harold Heinze were not on the
agenda, but they had all expressed an interest in giving short
presentations, and they were important voices.
^Presentation: Alaska Gasline Port Authority
PRESENTATION: ALASKA GASLINE PORT AUTHORITY
BILL WALKER, Manager and General Attorney for the Alaska Gasline
Port Authority (AGPA), stated that AGPA is in a joint
development agreement with Mitsubishi Corporation and Sempra
Energy, both of which contributed to the Wood Mackenzie report.
He said he intended to talk about the information that AGPA had
gathered over the last 15 years, and to highlight that the
success or failure in getting a gas pipeline project hinges on
the State of Alaska. He mentioned the declining TAPS throughput
and offered his belief that Judge Gleason made a good decision
on the TAPS valuation case.
MR. WALKER said that AGPA released the Wood Mackenzie "Alaskan
LNG Exports Competitiveness Study" as soon as it came out, and
would pay the authors to come to Alaska to present it if there
was sufficient interest from the legislature. He commented that
there are LNG projects are all over the world, and he looks
forward to the day when the federal coordinator has something to
coordinate. Right now, there was a great deal of focus on LNG
and not much on the coordination on a line to Canada. He
mentioned projects in Australia and North America, highlighting
that shale gas was affecting the market that the TransCanada
pipeline was headed into at the ATCO hub. He reminded the
committee that a risk in putting a pipeline into a hub was that
success or failure was based on the price of gas at that hub,
whereas putting gas on a ship makes the world your marketplace.
He displayed a list of North Slope leaseholder LNG projects
bound for Asian markets, and commented that Alaska can learn a
lot from what the three majors are doing with gas in other parts
of the world.
10:57:17 AM
SENATOR FRENCH asked what was preventing ExxonMobil, BP and
ConocoPhillips from committing to a project in Alaska similar to
what they were doing in Australia, New Guinea and Indonesia.
MR. WALKER responded that it was a matter of motivation. There
was no incentive for them to do a project here and no
disincentive for them not to do it. At this point Alaska was
more in the study process than the development process.
Continuing the presentation, he explained that AGPA told Wood
Mackenzie to analyze the project using the highest costs they
could find for a project. To that end, they used $4.18 as the
tariff to Valdez, which is considerably higher than the $2.45 to
$3.15 toll that TransCanada talked about yesterday. This
resulted in an estimated LNG cost of $8.50 per million btu
(mmbtu) delivered to the marketplace from Alaska. This compares
favorably to projects in the Lower 48, British Columbia and
Australia.
10:59:24 AM
SENATOR DYSON asked for an explanation of delivered cost, given
the high cost of transportation to tidewater and the distance to
market.
MR. WALKER replied it's the access to currently re-injected gas
upstream that puts the Alaska LNG liquefaction project in an
economically competitive position relative to other projects.
Wood Mackenzie, using TransCanada data, calculated it at
$0.26/mmbtu. It makes quite a difference that Alaska doesn't
have to do a lot of exploration and production, he said. By
comparison, Kitimat's processing costs are about $5.20.
SENATOR DYSON asked what the acronyms DES, FOB, and FID stand
for.
MR. WALKER explained that FID stands for "final investment
decision," FOB stands for "fee on board" and DES [refers to
"delivered ex-ship."]
He displayed a bar graph illustrating that the State of Alaska
controls 10.9 trillion cubic feet (tcf) in gas reserves between
Point Thomson and Prudhoe Bay, which is more than ExxonMobil,
ConocoPhillips, BP or Chevron. He noted that if Point Thomson
was returned to Exxon, the balance would change. He displayed
Wood Mackenzie's forecast of state and producer profits under
three, nominal dollar, price scenarios - NYMEX Strip, WoodMac
Base Case and WoodMac Worst Case and said commented that the
state can give up some of the revenue and cover some of the risk
or do it all and take the revenue with the risk.
MR. WALKER stated that there is a premium market for LNG and if
Alaska continues to stand on the sideline it will be filled by
projects from Australia, Qatar, Papua New Guinea, British
Columbia or the Lower 48. Without question, the single largest
stimulator for increased North Slope oil and gas exploration
would be a large volume gas pipeline. Recently the U.S.
Geological Survey (USGS) characterized the National Petroleum
Reserve in Alaska (NPR-A) as a gas province, and essentially
said that viable development of oil and gas in the reserve
depends on a North Slope gas pipeline to transport gas to
market. If there's a place to put the gas and the market
delivers a healthy return, there will be more exploration on the
North Slope. He stated agreement with the Mr. Persily's
characterization of AGIA as a permitting process. The lack of a
gas pipeline in Alaska is not due to a lack of permits, as
demonstrated by Yukon Pacific. They had plenty of permits, but
couldn't get any gas. Similarly, TransCanada doesn't have any
leverage to obtain gas. The problem is a lack of bringing gas to
the table.
He explained that in the early 1950s the Canadian Parliament
took control of the gas pipeline project from Alberta to Toronto
and hired out of the private sector to build the line. One day
after the pipeline was completed it was sold to the TransCanada
Pipeline Company. In a somewhat similar story, Governor Bill
Egan in 1971 announced to the potential owners of TAPS that he
wanted the State of Alaska to be the owner. Hearings were held
in Juneau at which time the oil companies objected vehemently to
state ownership of TAPS, but committed to start construction
very soon.
11:05:26 AM
MR. WALKER expressed concern that AGDC's Alaska Stand Alone Gas
Pipeline (ASAP) project was too small. It won't provide low-cost
energy to the state, it won't put more oil in TAPS and it won't
bring more revenue to the state. "We see what a large line makes
and what a small line costs, and the question is do we want
something that takes revenue or one that makes revenue?" He said
he firmly believes that Alaska will have one gas pipeline and he
hopes it won't be the smallest possible, limited by AGIA.
SENATOR FRENCH pointed to a slide titled "AGIA Constricted Small
Volume Line" and asked if he was referring to the overland
pipeline to Alberta or a spur off that line.
MR. WALKER answered he was referring to the bullet line that is
limited to .5 bcf as a result of limitations within AGIA.
SENATOR FRENCH asked if he would concede that building a 4.5
bcf/day pipeline to Alberta would put additional oil in TAPS.
MR. WALKER answered absolutely, if there's a market.
REPRESENTATIVE GARA asked if the in-state line actually would be
2.7 bcf/day.
MR. WALKER replied that would be the volume, but the capability
would be 5.9 bcf/day. With compression, a 48 inch line can
handle up to 6 bcf/day.
REPRESENTATIVE GARA asked where 2.7 came from.
MR. WALKER replied it will come from three trains from Bechtel;
3 trains at .9 bcf per train is equivalent to 2.7 bcf. He added
that that is about the maximum that can be put into the market.
REPRESENTATIVE GARA asked if it wouldn't stand to reason that a
4.5 bcf/day pipeline would produce cheaper gas for Alaskans than
a 2.7 bcf/day pipeline.
MR. WALKER replied he didn't see much difference in the tariff
between 2.7 bcf/day and 4.5 bcf/day, but there was no question
that selling gas from Valdez into the premium Asian market would
bring more revenue to the state.
11:08:36 AM
SENATOR STEDMAN asked him to elaborate on the reference to three
trains.
MR. WALKER explained that [the infrastructure to transport LNG
includes a processing plant that consists of one or more trains]
that compress and liquefy the gas at a ratio of 600:1.
Liquefaction can be done in increments of .9 bcf per train. He
said that matches the Alaska Oil and Gas Conservation Commission
(AOGCC) offtake Rule 9 allowance.
CO-CHAIR WAGONER asked why that shouldn't be of concern to
legislators, because that leaves no gas for markets in the rest
of the state.
MR. WALKER responded that his discussions with AOGCC have led
him to believe the volume could be increased to 3.3 bcf/day, and
he believes that once people know there will be a pipeline there
will probably be a lot of exploration and new gas finds while
looking for oil.
CO-CHAIR WAGONER asked if he was talking about the Alaska
Gasline Port Authority building a gas pipeline from the North
Slope to Valdez or TransCanada building that pipeline.
MR. WALKER explained that building the pipeline would be done by
the private sector. TransCanada could very well be the builder
and operator, but the State of Alaska should be owner, at least
initially. After the pipeline is built, the state may elect to
sell it, just as the Canadian government did following
completion of the Trans Canadian Gas Pipeline.
CO-CHAIR WAGONER asked what scenario ensures that the major
North Slope producers will put gas into the pipeline.
MR. WALKER replied the state wouldn't start the project until it
had that assurance. The state needs to come to the table and
assume some of the risk in order for the project to move
forward.
11:12:31 AM
CO-CHAIR WAGONER recalled that the respected and accomplished
attorney, Spencer Hosie, warned the committee that that option
would result in a long multi-year court battle, and the chance
of success was just 50:50.
REPRESENTATIVE HAWKER asked why the major producers weren't
clamoring for legislators to support the project if it was so
attractive.
MR. WALKER speculated that it was because gas pipeline talks
were very closely linked to talks about a reduction in oil
taxes. He reiterated his belief that the state needed to step up
and assume some of the risk.
CO-CHAIR WAGONER asked him to address the FAQ bullet point "Why
Valdez vs. Cook Inlet for an export port?"
MR. WALKER said he believes gas should be exported from both
locations, and was disturbed to learn that the data submitted to
FERC by TransCanada did not address the pipeline to Valdez. That
is required under AGIA, but they've been very clear about their
opposition to any LNG export out of Alaska.
11:17:57 AM
CO-CHAIR PASKVAN thanked Mr. Walker for the presentation and
welcomed Mr. Gottstein.
^ Presentation: Dynamic Capital Management, Inc.
PRESENTATION: DYNAMIC CAPITAL MANAGEMENT, INC.
11:19:09 AM
DAVID GOTTSTEIN, President, Dynamic Capital Management, Inc.,
said he had been a successful professional large company stock
and market analyst for more than 20 years, and an expert in
logistics and supply-chain management. He expressed appreciation
for the opportunity to share his thoughts on the development of
a gas pipeline, and the role the State of Alaska might
responsibly take to facilitate the development of a project.
He said he would describe 1) the dimension of the problem
regarding Alaska's long term fiscal future; 2) the current
problems related to developing a gas pipeline; 3) what a prudent
investment and due diligence effort to develop and build a gas
pipeline would look like; and 4) one option for getting an
efficient pipeline project financed and built.
MR. GOTTSTEIN directed attention to the spreadsheet labeled
"Permanent Fund Value Forecast" as of 2/21/11," and explained
that it paints a broad picture of the State of Alaska's fiscal
future over 25 years. The assumptions include: population growth
of 1 percent per year, inflation of 2.5 percent, annual decrease
in throughput in TAPS at -4 percent per year, and an annual
price increase forecast on crude oil of 5 percent. At the time
of the analysis, the Permanent Fund was valued at over $39
billion and the Constitutional Budget Reserve Account had over
$9 billion. The price of oil in year 25 was shown to be nearly
$300 per barrel (bbl), but he believes that forecast is
optimistic at best given that alternate energy solutions become
more viable as oil rises above $150/bbl. The return forecast
portion of the spreadsheet describes the asset allocation in
dollars and percentages, the expected return after fees, and an
attribution analysis that forecasts a 7.1 percent total return.
Doing the math makes it clear that all the state's major savings
accounts will be exhausted within 25 years.
MR. GOTTSTEIN said the lack of a pipeline process is not due to
AGIA, but rather to the price of natural gas. To finance a
pipeline in North America in today's market, the model is to
"Fill it Before You Build it." That means that a delicate set of
economic alignments must be in place to attract the debt and
equity capital necessary to finance a capital intensive project
like the gas pipeline.
According to industry and government information, the minimum
price of gas must be between $6 and $7 per mcf, but there is no
forecast of when there will be that price scenario, and the
price today is closer to $4 per mcf. Clearly there will be no
project with the traditional business model. This explains why
Denali pulled out, the producers are resisting gas commitments,
and TransCanada cannot create a market of buyers and sellers.
The pipeline must be sufficiently filled with tariff-production
gas volumes to cover the debt service, operations and
maintenance and provide a guaranteed rate of return. The
inability of the market to produce willing sellers of natural
gas at the forecasted low prices explains TransCanada's current
lack of progress. It is not AGIA.
11:26:13 AM
MR. GOTTSTEIN said the problem is how to get an efficient
pipeline in the current low-price environment. The Alaska
Gasline Development Corporation (AGDC) did an admirable job, but
it was only asked to recommend how to quickly and cheaply get
North Slope gas to tidewater. It was not asked to compare the
benefit of efficiencies and economies of scale and the potential
of larger projects against any possible time increase and
associated costs.
MR. GOTTSTEIN directed attention to "The Proposed Alaska Energy
Complex Project Analysis" chart in the packets and explained
that it was standard private sector analysis tool necessary for
any serious due diligence process involving billions of dollars
of investment. He said that at the minimum the state should
prepare a 30-year cash-flow analysis that includes tariffs
enhanced oil and gas revenues, and the energy cost savings made
possible by a more efficient gas pipeline distribution network.
Every dollar increase in tariff reduces the number of value-
added processors that are able to utilize North Slope gas as a
competitively priced feedstock in their product offerings. The
analysis envisions 24 scenarios, 12 distinct options, each
including assumptions with and without the Susitna Hydro
Project.
11:29:27 AM
MR. GOTTSTEIN listed the following scenarios:
· Base case - import LNG indefinitely.
· Forecasts regarding the new jack rigs and their potential
success.
· Small diameter or "bullet" pipeline.
· Initial small diameter line followed by a larger line,
assuming export markets come to fruition.
· A 36 inch pipeline initially that allows some degree of
export.
· A 36 inch pipe initially and an additional pipe later for
export.
· North Slope to Fairbanks gas pipeline - a hub concept with
staged capacity conditioning plants.
· Small diameter oil pipeline and a conversion of TAPS to a
gas pipeline.
· A North Slope LNG plant.
· The All Alaska pipeline as proposed by Bill Walker with the
Alaska Gasline Port Authority (AGPA).
· Gas to liquids
· Repeat each scenario with the Susitna Hydro Project
assumptions.
He encouraged the committee to expand the completed analysis to
include the foregoing project scenarios.
MR. GOTTSTEIN expressed particular favor for the North Slope to
Fairbanks gas pipeline hub concept. He described it as a "build
it and then fill it" development project and plan of finance.
The state does the least necessary to insure that an export
capacity gas pipeline is built that delivers Alaskan gas to
Alaskans in the shortest time possible, while maximizing the
opportunity for exporting gas in the most economical fashion
that requires no state subsidy, but is likely to generate high
returns. It's a tall order, but the alternative is failure, he
stated.
MR. GOTTSTEIN said the idea is to renegotiate AGIA and have the
State of Alaska partner with TransCanada to build a gas
pipeline. Through renegotiation, Alaska could eliminate the
500,000 mcf/day limitation. The state does not design, build,
own or operate the pipeline in this approach. That could be left
to TransCanada. In exchange for loan guarantees that are likely
to cost no more than $2-3 billion over time, the state owns the
rights to the excess capacity of an export-sized gas pipeline
from the North Slope to Fairbanks. The state would commercially
release the excess capacity into the market when it can absorb
that excess capacity. Giving local utilities the opportunity to
work with private sector partners like TransCanada to develop a
companion project, and allowing connection to the hub
concurrently, will likely be a considerably lower cost option in
securing affordable long-term gas supplies when compared to
importing LNG or the building of an inefficient small-diameter
pipeline that does nothing to enhance North Slope oil recovery.
CO-CHAIR PASKVAN thanked Mr. Gottstein and welcomed Mr. Heinze.
^Presentation: Alaska Natural Gas Development Authority
PRESENTATION: ALASKA NATURAL GAS DEVELOPMENT AUTHORITY
11:38:37 AM
HAROLD HEINZE, Chief Executive Officer (CEO), Alaska Natural Gas
Development Authority (ANGDA), Department of Revenue, explained
that ANGDA was a public corporation of the state that was
created by the initiative process in 2002. The mission is to do
what's possible to help get North Slope gas to market in a
manner that benefits Alaskans.
He said would to cover two things, both from the consumer's
perspective. First is The Alaska Pipeline Project (APP) and
second is the ASAP work. [The Alaska Gasline Development
Corporation's work on the Alaska Stand Alone Gas Pipeline
(ASAP).] He explained that ANGDA participated in the open season
for both the Denali pipeline and the Alaska Pipeline Project and
believes the competition was beneficial. ANGDA has secured space
in the APP for offtake in-state at discounted or "negotiated"
tariff rates. He noted that in the past, ANGDA did work on a
spur pipeline, and it's sitting in a "ready if needed" package.
MR. HEINZE explained that ANGDA has been in commercial
negotiations with the APP for more than a year, and they have
been very responsive to the fact that in-state gas delivery is
an important part of their project. While it is not their
responsibility, they view it as very important in the overall
scope of their project.
11:43:08 AM
He displayed a chart comparing Cook Inlet retail natural gas
prices and explained that it responds to questions that were
asked about the Alaska Pipeline Project and what it may or may
not mean to the Alaskan consumer as opposed to the bullet line.
Prices per million btu ($/mmbtu) comparisons were calculated for
flow rates of 500 million cubic feet per day (mmcf/day), 250
mmcf/day and 167 mmcf/day. He opined that this was a reasonable
range of what in-state gas needs might be. For example, since
the ASAP work was announced [on July 1, 2011], two businesses
from Fairbanks, Golden Valley Electric and Flint Hills Refinery,
announced they were looking at trucking LNG from the North
Slope. If that project is operating in 2019 and 2020 it will be
hard for the bullet line to compete. That might be 50 mmcf/day
that suddenly wouldn't be in the demand side of the equation. He
said he also finds it hard to believe that Cook Inlet would just
go away, because it's a prolific basin that's been producing for
decades and will continue to produce for decades at some level.
He said that's why he chose three different rates. It becomes
important because when you look at the efficiencies of using a
big pipeline to move most of the distance in the state and then
get off onto a smaller spur line, even when you are at low
volume the big pipeline is efficient to use because you're
riding with the other guy who is paying the ticket so you get
all the advantages regardless of how little or much you do.
MR. HEINZE said it's fair to point out that at 500 mmcf/day, the
prices for the ASAP bullet line, the spur off the Alberta line
at Delta Junction and the spur off the Valdez line at Glennallen
are essentially the same. Respectively they are $12.61/mmbtu,
$10.35/mmbtu and $11.13/mmbtu. What this says is that if there
is a large market in the state there will probably be an
opportunity, at a consumer level, to benefit regardless of the
project.
MR. HEINZE said it's also very clear that the uncertainty of the
ASAP bullet line is a very major risk. Until that volume is
precisely and contractually defined with commitments, there is
risk to the Alaskan consumer. Despite the state participation,
the ultimate guarantor is the gas-user, and that is the Alaska
public. He estimated that the commitment on an individual
homeowner basis could be on the order of $50,000.
11:46:41 AM
He related that over the last month ANGDA reviewed and analyzed
the ASAP bullet line project plan and associated feasibility
studies, and ultimately concluded that the Alaska consumer would
be best served by the APP pipeline with a spur gas pipeline. He
pointed out that the project plan presented is not a spur line
plan, but that's okay because a spur line can generally start
behind and finish ahead compared to the big project. Also, the
trucking decision by Golden Valley Electric and Flint Hills may
actually be a good solution for Fairbanks.
11:48:36 AM
CO-CHAIR WAGONER asked if he believes that Fairbanks will
benefit from the decision because there will be surplus hauling
and production capacity.
MR. HEINZE replied there is a balance of a couple things. The
reality of the Fairbanks energy market is that it can be served
by natural gas. It's logistically simple to supply Golden Valley
Electric and Flint Hills and the military bases. Downtown and
the university may have to have their own separate LNG receiving
point, but it's not a big deal to stop a truck at a certain
spot. The real issue is asking consumers 5-10 years down the
road to stop trucking LNG, for which there is an operating cost,
and instead pay for a spur line that has a capital recovery
component.
CO-CHAIR WAGONER asked if he'd heard any discussion about what
that would do to the market for Fairbanks Natural Gas, which
currently supplies some users in the Fairbanks area.
MR. HEINZE replied he hadn't heard any discussion, but Fairbanks
Natural Gas proposed a trucking operation from the North Slope.
He added that he likes that Golden Valley Electric is a utility,
because that means that any savings flows directly to the
consumer.
11:51:41 AM
SENATOR FRENCH asked if he knew what the delivered cost would be
for LNG to Fairbanks.
MR. HEINZE answered no, but the trucked price from Cook Inlet is
similar to fuel oil; right now it's about $24/mmbtu. In past
discussions with GVEA, there was talk about a discount of about
one-third off that price. He opined that, depending on the
schedule, it seems doable.
He displayed a chart of Cook Inlet retail energy prices
comparing the bullet line to several other options, and
explained that they all have different risk/reward profiles,
different investment requirements and different cost structures
for the consumer. The bullet line was portrayed at three
different volumes - 500 mmcf/day, 250 mmcf/day and 167 mmcf/day.
For example, the latest Cook Inlet gas pricing formula for 250
mmcf/day is $10.24/mmbtu, whereas it's $15.26/mmbtu for the
bullet line. White birch at $250/cord comes to $12.32/mmbtu. LNG
import from Sahkalin at $16/mmbtu, Canada at $13-$15/mmbtu and
the North Slope at $12/mmbtu are all within the range of meeting
the utility needs in Cook Inlet, he said. But the options would
shrink if the bullet line throughput uncertainty could be
eliminated.
11:53:51 AM
REPRESENTATIVE GARA asked what the legislature could do to make
the big line to either Valdez or the Lower 48 a reality.
MR. HEINZE said don't make a choice between one project or the
other. Advance in good faith both the Alaska Pipeline Project
and ASAP. For APP it may be as simple as staying the course
dealing with producer and other potential shipper concerns. The
concern with ASAP is to spend the next several hundred million
dollars doing things in the field in Alaska, not in Houston.
Regardless of the project, on-the-ground work is always valuable
and advances the time schedules.
11:55:24 AM
SENATOR DYSON recalled that the presentation Monday on the ASAP
bullet line talked about $19 LNG imported into Cook Inlet as
opposed to $15.26.
MR. HEINZE replied the numbers portrayed in the chart are trying
to be fair in terms of cost at the wellhead and how the net back
works.
11:57:18 AM
SENATOR DYSON asked him to discuss the potential to supply
propane or compressed natural gas (CNG) to rural Alaska.
MR. HEINZE said ANGDA is interested in creating a wholesale
propane opportunity on the North Slope. Propane is a logical
alternative for supplying the one-third of Alaska that will
never see gas from a gas pipeline. He added that most of ANGDA's
efforts are focused on what has to be done immediately to solve
the Cook Inlet problems over the next 9-10 years.
In conclusion he suggested that to develop a framework for the
legislature's project investment decision, it would be necessary
to first decide on what elements should surround that framework.
Without specific direction and additional funding, ANGDA might
not be much help.
CO-CHAIR PASKVAN thanked Mr. Heinze and announced that public
testimony would start at 1:30 p.m.
12:00:39 PM
CO-CHAIR PASKVAN announced a recess.
1:33:05 PM
CO-CHAIR PASKVAN reconvened the meeting and announced the
committee would hear public testimony.
MARY ANN PEASE, owner, MAP Consulting, said she had been an oil
and gas consultant for the past 10 years, and most recently she
focused on the propane project for ANGDA. This is a timely
project and an attractive alternative for rural communities.
She explained that ANGDA developed the Alaska Propane Consortium
to advance the concept of shipping propane from the North Slope.
With proper commercial arrangements with the producers, the
private sector could start delivering propane immediately as an
attractive alternative to diesel. The idea is to start with
existing propane facilities on the North Slope and then work
with the private sector to build and expand storage and delivery
infrastructure to support distribution to the Interior and rural
Alaska.
MS. PEASE said she had also worked with ROUSH CleanTech, who
helped develop liquid propane autogas fuel systems for a variety
of Ford vehicles. Two of these trucks being used by the state's
fleet services and another by CHMHill doing fleet services on
2
the North Slope. There is definitely a sense that conversion to
propane is a viable option, given the ready availability of
propane on the North Slope, she said. Propane offers
environmental advantages as a cleaner burning fuel and much
lower maintenance costs for equipment.
She related that she also participated in the in-state bullet
line project on behalf of the Pacific Propane Gas Association
(PPGA). It represents propane marketers and related businesses
throughout Alaska, Hawaii, Oregon and Washington. They have been
an active participant in the Alaska Propane Consortium and
propane advancement throughout the state and nation, she said.
MS. PEASE stated that trucking propane from the North Slope and
then barging ISO containers to delivery points for river
communities is a timely and commercially viable project. She
urged the committee to support all efforts related to propane
conversion, and suggested inclusion of propane as an alternative
fuel, because it is the best alternative for lowering the cost
of energy for rural Alaska.
1:39:18 PM
SENATOR STEVENS said he would hope that in addition to river
communities that she would pay attention to the myriad of other
small communities that use propane as well.
MS. PEASE said absolutely, and the propane map shows all
communities in the state that import propane. She added that
Hawaii is a big propane user, importing most of it from Asia,
and is interested in a larger export opportunity.
SENATOR STEVENS asked how difficult it is to remove propane from
the stream.
MS. PEASE replied there is a facility on the North Slope that
produces about 500 barrels per day. It has expansion potential
and would have little impact on Prudhoe Bay from an operational
standpoint.
1:41:56 PM
CO-CHAIR WAGONER asked what the daily consumption of propane is
for Alaska.
MS. PEASE replied Northern Economics determined that current
propane utilization would be in the range of 2,500-3,000 barrels
a day, and in the 10-15 year period would grow to 30,000
bbl/day.
CO-CHAIR WAGONER recalled that a Cordova businessman had a
certificate of convenience and intended to transport propane to
gasify the city. He asked if that venture ever got off the
ground.
MS. PEASE answered that businessman wanted to file for a
certificate of public convenience and necessity with the
intention of becoming a gas distribution system, but to her
knowledge no substantial progress has been made on that venture.
1:44:13 PM
MALCOLM B. ROBERTS, representing himself, stated that he has
followed the issue of the natural gas pipeline since 1981 due to
his 40-year association with the late Walter Hickel who
passionately supported building a pipeline from Prudhoe Bay to
Valdez. The gas would then be liquefied and shipped to lucrative
markets worldwide.
MR. ROBERTS stated that over time he has come to the conclusion
that the three major North Slope producers want to ship Alaska
gas into Canada to feed their petrochemical complex in Alberta
and/or use it to "cook" the tar sands to produce synthetic oil.
If this isn't possible, the producers want to warehouse the gas
so as to not compete with their other LNG investments worldwide.
That would benefit their stockholders, not the people of Alaska.
MR. ROBERTS said he was encouraged to hear comments from this
committee confirming their understanding of the "owner state"
concept with regard Alaska's natural resources and their
commitment to set policy and negotiate on behalf of the people
of Alaska. This obligation is based on Article 8 of the state
constitution says that natural resources in this state must be
conserved and developed for the maximum benefit of the people,
he said.
The fact that the people of Alaska understand the owner state
concept was illustrated by the favorable vote in 2002 that
mandated that the state build an all-Alaska natural gas
pipeline, but after nearly a decade that law has been ignored,
thwarted and violated. This ignores a shovel-ready project that
would bring tens of thousands of jobs to the state and many
times that nationwide. In addition it will stimulate additional
exploration on the North Slope and offshore.
MR. ROBERTS said he firmly believes that the all-Alaska natural
gas pipeline project is one of the greatest environmental
opportunities in the world. It's time to step forward and act as
the owners and build an all-Alaska gas pipeline.
1:49:26 PM
REPRESENTATIVE GARA stated disagreement with his statement that
Alaska gas will be used to fuel the tar sands in Canada. He
pointed out that Canada has an excess of gas so it will be
Canadian gas that will be used to fuel the tar sands. That is
not a fair argument.
MR. ROBERTS said he would check and correct his comments, but
that's what he heard when he was last in Alberta. He added that
he's opposed to that process.
1:50:52 PM
DOUGLAS GIBSON, representing himself, expressed concern that
heating costs account for a large portion of the annual budgets
for government, businesses, school districts and military
facilities. Anything that can be done to reduce those costs will
help those organizations and homeowners and reduce property tax.
Bringing gas to Fairbanks and Anchorage would be very helpful.
MR. GIBSON said he also believes that it's a big handicap to
restrict the export of Alaska resources. That issue needs to be
resolved as quickly as possible. He said Japan is an important
strategic partner and that country would probably much rather
rely on Alaska [for resource needs] than Indonesia.
He continued that high heating costs are particularly
problematic for retired people. If utility costs could be kept
down it would encourage retirees to continue to live in Alaska.
He said he's learned a lot over the last several days and would
encourage the legislature to continue to get public feedback on
this important issue.
1:55:29 PM
JOE GRIFFITH, General Manager, Matanuska Electric Association
(MEA) and President, ARCTEC - The Railbelt G & T, applauded the
efforts to hold hearings on the biggest challenge facing the
Railbelt and Southcentral. He said the MEA utility has a dire
need for natural gas since it has none on contract and a plant
that is projected to be online by 2015 to serve 57,000 members
in the MatSu Valley and Eagle River. He explained that MEA is
pursuing a supply of natural gas through a co-op gas aggregator
that was created several years ago to find gas supplies for the
utilities. Separately they are also pursuing LNG importation and
the costly option of using diesel as a back-up.
MR. GRIFFITH expressed hope that the bullet line would be
successful and observed that without substantial state
participation it would probably never meet MEA's needs, because
of the cost of moving a small amount of gas. He highlighted that
the Regulatory Commission of Alaska (RCA) requires utilities to
make purely economic decisions in order to determine that a
utility's costs are reasonable.
MR. GRIFFITH suggested the legislature keep all available
alternatives on the table and make no decisions until all the
facts were in. He expressed appreciation for the continued
efforts to get Cook Inlet gas to the users as well as bringing
in gas from the North Slope.
CO-CHAIR PASKVAN asked what volume of gas MEA would like to have
under contract.
MR. GRIFFITH replied his load estimate would be met by about 6
billion cubic feet/year.
SENATOR FRENCH asked what the average annual need was on a daily
basis.
MR. GRIFFITH estimated the need would be about 13,000-15,000
mcf/day when the plant came online.
SENATOR FRENCH observed that that represents about three percent
of the bullet line flow rate.
CO-CHAIR PASKVAN asked what cost estimate the utility uses for
fuel supplies.
MR. GRIFFITH replied MEA uses $8/mcf and all the estimates for
the lower flow rates on the bullet line are above that. The cost
of importing is probably about $12/mcf, which is about 25
percent above what MEA believes is a reasonable number. He added
that it will be difficult to get MEA members to accept a price
that's above $10/mcf.
CO-CHAIR WAGONER asked where MEA purchases its power, or if they
have a combination of power purchase and production.
MR. GRIFFITH replied a small percentage comes from hydroelectric
facilities at Bradley Lake and Eklutna facility, both of which
are very economic. The balance is purchased from Chugach.
2:03:48 PM
ROGER PEARSON, representing himself, said he had two ideas. One
was that the state needs to undertake a larger cost/benefit
analysis for its citizens as opposed to the emphasis the
governor's office has placed on stockholder profits. Along that
line, it's important to look at the benefits for improved
infrastructure for the entire state. Western Alaska is in dire
need of infrastructure, particularly energy, and there is no
shortage of need for increased energy in Southcentral, Interior
and Southeast. He suggested that it was time for the legislature
to look beyond the bottom line and start looking at the broader
issues of what will benefit the state, particularly long-term,
sustained infrastructure expansions. He further suggested that
it would be most helpful if more information was posted on the
various proposals. It would make it easier for the citizens to
make honest evaluations.
2:06:37 PM
BILL WARREN, representing himself, said he was retired out of
the Plumbers and Pipefitters Local 367, and had worked all over
Alaska including the TAPS pipeline. He stated that despite years
of working on the natural gas problem the current situation is
critical. It is difficult to keep utilities running and Nikiski
has been "de-industrialized" due to no gas. It's a rustbelt
situation with high unemployment.
MR. WARREN offered his view that the big oil companies and
Alaska politicians have utterly failed Alaskans. He cited a
meeting four years ago when his granddaughter was promised the
in-state gas pipeline, but nothing has been done; the Susitna
Dam that comes up every 10 years or so; the Enstar deal that
comes up every three or four years with the current model being
the high-tariff, small-scope Fauske/Chenault line; ANGDA that
was supported by 63 percent of Alaskans but which the
legislature fired; and Cook Inlet. With respect to AGIA, he said
Exxon wants to keep its leases and is busy everyplace but
Alaska. Legislators have traveled the world researching energy
when the solution was right in Alaska's backyard. The solution
is the all-Alaska natural gas pipeline. It's got the route, size
and markets.
2:11:24 PM
GEORGE PIERCE, representing himself, stated that 63 percent of
Alaskans said they wanted an in-state gas pipeline. He expressed
concern that the legislature wasn't listening to the citizens,
but to the big corporations and special interest groups. The
resource belongs to the people and the people want an in-state
gas pipeline. He expressed the view that the TransCanada
pipeline was a waste of the resource.
2:13:59 PM
LYNN WILLIS, representing himself, said he was trying to
determine whether or not he and his family can continue to live
in Alaska. His concern is the time-gap between the last Cook
Inlet production and first flow through the bullet line. There
is talk about importation but it's necessary to oversee what's
going on to get that ready. House Bill 280 that passed during
the 26th Legislature said that the RCA had to look at both cost
and supply. He said he worries about the vertical monopoly that
is being built in Cook Inlet. He asked who will oversee and
watch how that gas is offloaded and where, how it will be re-
gasified, who will put it in the ground. A lot of work needs to
be done to get ready for the importation. Perhaps it won't be
needed, but it appears likely. Until recently he'd heard that
2013 and 2014 were the trigger points for importation. Yesterday
he heard the trigger point was 2018, but nothing was said about
needing gas for extraction of oil. Today he heard that Matanuska
Electric Association needs more gas. Escopeta talked about
coming to Alaska to look for oil, but didn't talk about the
amount of Cook Inlet gas it would to find oil. Nor did they
mention a continuing supply or that a gas well that is shut down
may not come back on line.
MR. WILLIS said it's nice to hear about future projects, but
it's important to focus on the gap. There's an obligation to
protect consumers.
CO-CHAIR WAGONER said that in the last several days one of the
presentations included a slide that showed current and future
gas storage facilities on the peninsula. He opined that the
wells are too profitable for the companies to let them sand in,
but he agreed that the timeline is tight.
MR. WILLIS said he's concerned about the next few years and
wants assurance that he won't be driven out by price.
2:19:14 PM
KAYE LAUGHLIN said she was representing the Laughlin Company and
four generations of Laughlins in Alaska. She related that she
had done environmental and regulatory work in Alaska for three
decades with an emphasis on oil and gas on the North Slope and
Cook Inlet.
MS. LAUGHLIN highlighted that the Keystone XL pipeline was now
in environmental litigation, and emphasized the need for a well-
thought-out plan that encompasses everything, not just a bunch
of projects. Her perspective is that it's unconscionable that
the pipeline could pass someone's home and give them access to
gas. With regard to which project should go forward, she
suggested funding them all so they can proceed simultaneously
rather than putting all the eggs in one basket. This will
eliminate the risk of having to start from scratch and will make
it possible to make rational decisions on each.
CO-CHAIR WAGONER asked if the Keystone litigation was on the
second phase of construction, because he was under the
impression that the first phase into Oklahoma had been
completed.
MS. LAUGHLIN replied it goes into Cushing Oklahoma and
ultimately down to refineries in Texas.
CO-CHAIR WAGONER asked what portion the litigation targeted.
MS. LAUGHLIN replied environmental groups are looking at the
whole thing.
CO-CHAIR WAGONER asked if dislike of the tar sands was the
underlying issue or if there were also environmental concerns
past Cushing into the Gulf Coast.
MS. LAUGHLIN replied it's all of the above.
2:24:12 PM
TONY IZZO, representing himself, stated that he had 30 years of
experience in the natural gas business, and was testifying to
express concern about the gap that was mentioned earlier,
because a regulated utility has an absolute duty to provide
continuous and reliable service to its customers. It isn't an
option. He referenced testimony in the last two days that
indicated that some projects might come to fruition by 2018 and
2019 and said that based on his experience, that timeline was
optimistic. Things come up and things can change overnight.
He said it's somewhat of a distraction for utility managers to
have to worry about finding gas to fill their demand. Mr.
Griffith, for example, said he needs gas by 2015. If he doesn't
meet that responsibility he risks losing the certificate to
serve those 57,000 people and somebody else will take that
business. Whoever takes it will do exactly what Mr. Griffith
talked about; they will find gas to fill the demand.
To meet their obligations over the next 10 years utilities are
going to have to do something like Fairbanks is proposing, which
is to truck gas from the North Slope. The concern is that
efforts to get gas over the short term and over the long term
may work independent of one another. Utility managers may have
to make decisions in the next few years that will preclude
participation in a project like the bullet line regardless of
the fact that they may want that project to be a success.
MR. IZZO expressed optimism about the recent activity in Cook
Inlet and openings in demand. He mentioned Buccaneer, Escopeta,
Cook Inlet Energy and Armstrong and said he'd held a number of
confidential discussions about potential supply and he could
share that they're somewhere between $6 and $9.50.
SENATOR FRENCH expressed appreciation for his patience in
waiting to speak and thanked him for sharing his thoughts and
extensive experience to help him understand gas supplies
particularly in Cook Inlet.
SENATOR STEVENS thanked Mr. Izzo for sharing his wisdom and
helping to address what is a statewide problem.
2:31:37 PM
JERRY MCCUTCHEON, representing himself, said he'd been around
the oil patch since 1958 and he believes that the only reality
is Senator Wagoner's $25 million bounty for the first jack up
rig on station in Cook Inlet. Everything else that was said this
morning, except for the improbability of the TransCanada gas
pipeline, is wishful thinking. What gas there is on the North
Slope is needed for oil production, he said, and it's being used
at twice the rate that the AOGCC admits. He warned the committee
not to make the mistakes of the Cook Inlet platforms and instead
follow the example of Swanson River. He suggested the committee
invite Mr. Seamount to appear at the Kenai hearings and get the
real, not guarded, facts.
2:36:18 PM
PAUL KENDALL, representing self, said he wanted to show the
committee something about magnetic fields.
CO-CHAIR PASKVAN reminded Mr. Kendall that the topic before the
committee was in-state gas and AGIA and that they would like to
hear his thoughts on that general topic.
MR. KENDALL responded that the discussion was really about the
welfare and benefit of American citizens. He was testifying in
an effort to contribute to a better community and the fact that
testimony was limited to three or four minutes illustrated that
the system was busted. He opined that the committee had serious
business to take care of, and one way or another the citizens
were going to bring America back.
He suggested putting in a low-lying gas pipeline in Fairbanks
that was capable of carrying hydrogen. Two hundred miles from
that put in a small power plant, and go another two hundred
miles to the Yukon River with DC high-voltage cable. He said a
10 by 10 by 10 block of water with continuous 10-foot fall could
power 60,000 homes. From there it would be possible to go into
Fairbanks and under the ice flows from the surrounding three
rivers. At that point there would be no excuse, he said. He
suggested it was time for legislators to lead and help define
the next ten years. He said the oil companies are getting ready
to move out of Alaska; there's no reason for them to stay. But
if Alaskans come together and develop new technologies the oil
companies will have to stay, and the citizenry could demand that
the pipeline be filled.
2:41:51 PM
CO-CHAIR PASKVAN asked Mr. Kendall to conclude his comments.
MR. KENDALL expressed frustration that he hadn't had time to
discuss the huge document that was in front of the members.
CO-CHAIR PASKVAN assured him that his document was part of the
record.
MR. KENDALL concluded that Alaska has the chance to lead the
world in energy production that is not reliant on oil.
2:44:29 PM
CO-CHAIR PASKVAN closed public testimony.
CO-CHAIR WAGONER stated that the committee intended to have
further hearings on this matter, and specifically wanted to hear
from the Cook Inlet producers about their 3-5 year plans and
what they can do to meet the gas demand during the gap.
CO-CHAIR PASKVAN commented that it was August in Alaska and all
seven members of the committee were present for the majority of
the hearings.
2:46:26 PM
There being no further business to come before the committee,
Co-Chair Paskvan adjourned the meeting at 2:46 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Persily_SEN RES_ Maps and Charts 8-17-11.pdf |
SRES 8/17/2011 9:00:00 AM |
|
| Roberts Testimony_SRES_8-17-11.pdf |
SRES 8/17/2011 9:00:00 AM |
|
| Walker Testimony_SRES_8-17-11.pdf |
SRES 8/17/2011 9:00:00 AM |
|
| Heinze of ANGDA - Public Testimony before Senate Resources on 081711.pdf |
SRES 8/17/2011 9:00:00 AM |
|
| Gottstein Testimony_SRES_8-17-11.pdf |
SRES 8/17/2011 9:00:00 AM |
|
| Pease Testimony_SRES_8-17-11.pdf |
SRES 8/17/2011 9:00:00 AM |
|
| McCutcheon Testimony_SRES_8-17-11.pdf |
SRES 8/17/2011 9:00:00 AM |