Legislature(2013 - 2014)BUTROVICH 205

02/21/2014 03:30 PM RESOURCES


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03:31:42 PM Start
03:32:03 PM SB138
04:55:54 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 138 GAS PIPELINE; AGDC; OIL & GAS PROD. TAX TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                       February 21, 2014                                                                                        
                           3:31 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Cathy Giessel, Chair                                                                                                    
Senator Fred Dyson, Vice Chair                                                                                                  
Senator Peter Micciche                                                                                                          
Senator Click Bishop                                                                                                            
Senator Anna Fairclough                                                                                                         
Senator Hollis French                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Lesil McGuire                                                                                                           
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 138                                                                                                             
"An  Act  relating   to  the  purposes  of   the  Alaska  Gasline                                                               
Development Corporation  to commissioner of natural  resources on                                                               
the custody  and disposition of  gas delivered to the  advance to                                                               
develop a large-diameter natural  gas pipeline project, including                                                               
treatment  state  in  kind;  relating to  the  authority  of  the                                                               
commissioner   of   natural   resources   to   and   liquefaction                                                               
facilities; establishing the  large-diameter natural gas pipeline                                                               
project  propose  modifications to  existing  state  oil and  gas                                                               
leases; making  certain information  fund; creating  a subsidiary                                                               
related  to  a  large-diameter   natural  gas  pipeline  project,                                                               
provided  to   the  Department  of  Natural   Resources  and  the                                                               
Department  of  Revenue   including  treatment  and  liquefaction                                                               
facilities;  relating  to  the   authority  of  the  exempt  from                                                               
inspection  as a  public record;  making certain  tax information                                                               
related  to an  commissioner  of natural  resources to  negotiate                                                               
contracts related to North Slope  natural election to pay the oil                                                               
and gas  production tax in  kind exempt from  tax confidentiality                                                               
gas  projects,  to  enter   into  confidentiality  agreements  in                                                               
support   of  contract   negotiations  provisions;   relating  to                                                               
establishing under  the oil  and gas production  tax a  gross tax                                                               
rate and implementation, and to  take custody of gas delivered to                                                               
the  state under  an  election  for gas  after  2021; making  the                                                               
alternate minimum  tax on oil  and gas  produced north of  to pay                                                               
the oil  and gas production  tax in  kind; relating to  the sale,                                                               
exchange, or disposal 68 degrees  North latitude after 2021 apply                                                               
only to oil;  relating to apportionment factors  of gas delivered                                                               
to the state under an election  to pay the oil and gas production                                                               
tax  in  of  the  Alaska   Net  Income  Tax  Act;  authorizing  a                                                               
producer's  election to  pay the  oil and  kind; relating  to the                                                               
duties of the  commissioner of revenue to  direct the disposition                                                               
of gas  production tax in  kind for  certain gas and  relating to                                                               
the  authorization;  relating  to   revenues  received  from  gas                                                               
delivered to  the state in kind  and to consult with  the monthly                                                               
installment payments of the oil  and gas production tax; relating                                                               
to interest payments  on monthly installment payments  of the oil                                                               
and  gas   production  tax;   relating  to   settlements  between                                                               
producers  and royalty  owners for  oil and  gas production  tax;                                                               
relating  to  annual  statements   by  producers  and  explorers;                                                               
relating  to  annual production  tax  values;  relating to  lease                                                               
expenditures;  amending  the definition  of  gross  value at  the                                                               
'point of  production' for gas  for purposes  of the oil  and gas                                                               
production tax; adding definitions  related to natural gas terms;                                                               
clarifying that credit may not  be taken against the in-kind levy                                                               
of the  oil and gas  production tax for  gas for purposes  of the                                                               
exploration incentive  credit, the oil or  gas producer education                                                               
credit,  and the  film production  tax credit;  making conforming                                                               
amendments; and providing for an effective date."                                                                               
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 138                                                                                                                  
SHORT TITLE: GAS PIPELINE; AGDC; OIL & GAS PROD. TAX                                                                            
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/24/14       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/24/14       (S)       RES, FIN                                                                                               
02/07/14       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/07/14       (S)       Heard & Held                                                                                           
02/07/14       (S)       MINUTE(RES)                                                                                            
02/10/14       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/10/14       (S)       Heard & Held                                                                                           
02/10/14       (S)       MINUTE(RES)                                                                                            
02/12/14       (S)       RES WAIVED PUBLIC HEARING NOTICE, RULE                                                                 
                         23                                                                                                     
02/12/14       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/12/14       (S)       Heard & Held                                                                                           
02/12/14       (S)       MINUTE(RES)                                                                                            
02/13/14       (S)       RES AT 8:00 AM BUTROVICH 205                                                                           
02/13/14       (S)       Heard & Held                                                                                           
02/13/14       (S)       MINUTE(RES)                                                                                            
02/14/14       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/14/14       (S)       Heard & Held                                                                                           
02/14/14       (S)       MINUTE(RES)                                                                                            
02/19/14       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/19/14       (S)       Heard & Held                                                                                           
02/19/14       (S)       MINUTE(RES)                                                                                            
02/20/14       (S)       RES AT 8:00 AM BUTROVICH 205                                                                           
02/20/14       (S)       Heard & Held                                                                                           
02/20/14       (S)       MINUTE(RES)                                                                                            
02/21/14       (S)       RES AT 8:00 AM BUTROVICH 205                                                                           
02/21/14       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JOE BALASH, Commissioner-designee                                                                                               
Department of Natural Resources (DNR)                                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Commented on possible oil tax regimes.                                                                    
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:31:42 PM                                                                                                                    
CHAIR CATHY GIESSEL called the Senate Resources Standing                                                                      
Committee meeting to order at 3:31 p.m. Present at the call to                                                                  
order were Senators French and Chair Giessel.                                                                                   
                                                                                                                                
3:32:03 PM                                                                                                                    
CHAIR GIESSEL recessed to a call of the chair.                                                                                  
                                                                                                                                
4:20:37 PM                                                                                                                    
CHAIR GIESSEL called the meeting back to order; Senators Dyson,                                                                 
Fairclough, Bishop, Micciche, French, and Chair Giessel were                                                                    
present.                                                                                                                        
                                                                                                                                
         SB 138-GAS PIPELINE; AGDC; OIL & GAS PROD. TAX                                                                     
                                                                                                                                
CHAIR GIESSEL announced SB 138 to be up for consideration; CSSB                                                                 
138(RES), version 28-GS2806\N, was before the committee.                                                                        
                                                                                                                                
4:21:35 PM                                                                                                                    
SENATOR FRENCH moved Amendment 1, version\N.1.                                                                                  
                                                 28-GS2806\N.1                                                                  
                                                      Bullock                                                                   
                                                                                                                                
                          AMENDMENT 1                                                                                       
                                                                                                                                
     OFFERED IN THE SENATE              BY SENATOR FRENCH                                                                       
                                                                                                                                
     TO:  CSSB 138(RES), Draft Version "N"                                                                                      
     Page 13, line 18, following "party":                                                                                   
          Insert                                                                                                                
               "(A)  may not include a provision relating                                                                   
     to  the  tax  rate  applicable   to  the  oil  and  gas                                                                
     production  tax under  AS 43.55  as it  relates to  the                                                                
     production of oil; and                                                                                                 
               (B)"                                                                                                         
                                                                                                                                
     Page 15, line 10, following "party":                                                                                       
          Insert                                                                                                                
               "(A)  may not include a provision relating                                                                       
     to  the  tax  rate  applicable   to  the  oil  and  gas                                                                    
     production  tax under  AS 43.55  as it  relates to  the                                                                    
     production of oil; and                                                                                                     
               (B)"                                                                                                             
                                                                                                                                
     Page 23, line 17, following "project":                                                                                 
          Insert "; the commissioner shall ensure that a                                                                    
     contract  negotiated  under  this  paragraph  does  not                                                                
     include   a  provision   relating  to   the  tax   rate                                                                
     applicable  to the  oil and  gas  production tax  under                                                                
     AS 43.55 as it relates to the production of oil"                                                                       
                                                                                                                                
     Page 24, line 24, following "project":                                                                                     
          Insert "; the commissioner shall ensure that a                                                                        
     contract  negotiated  under  this  paragraph  does  not                                                                    
     include   a  provision   relating  to   the  tax   rate                                                                    
     applicable  to the  oil and  gas  production tax  under                                                                    
     AS 43.55 as it relates to the production of oil"                                                                           
                                                                                                                                
SENATOR FAIRCLOUGH objected.                                                                                                    
                                                                                                                                
SENATOR FRENCH  explained that Amendment  1 would take  oil taxes                                                               
off the  table in this  process. It basically inserts  at several                                                               
points in the bill a prohibition  on including oil tax terms in a                                                               
contract  developed under  the act.  It prevents  oil taxes  from                                                               
becoming a  point of negotiation.  And industry was  evasive when                                                               
he  talked to  them about  it.  He explained  that the  CS has  a                                                               
provision that would keep the  commissioners from negotiating our                                                               
royalty rate too low and this is the same idea.                                                                                 
                                                                                                                                
One concern  he had about the  general approach of this  bill was                                                               
that it's  very similar to  the general approach taken  from 1998                                                               
to 2006  under the Stranded  Gas Development Act  (AS 43.82.010).                                                               
It was a  deeply one-sided contract that didn't  even get brought                                                               
up for  a vote  in the  legislature. He  hoped they  learned from                                                               
that,  but he  thought the  industry would  not be  able to  keep                                                               
themselves  from  pressing  and potentially  winning  concessions                                                               
from the  state in the oil  tax arena if that's  an option. After                                                               
all,  they offered  us  a  dime on  the  dollar  in the  Pipeline                                                               
evaluation case.                                                                                                                
                                                                                                                                
SENATOR FAIRCLOUGH  asked if  there is a  reason the  state would                                                               
want to have that flexibility.                                                                                                  
                                                                                                                                
4:24:21 PM                                                                                                                    
JOE   BALASH,   Commissioner-designee,  Department   of   Natural                                                               
Resources  (DNR),   Juneau,  Alaska,  said  he   appreciated  the                                                               
sentiment  expressed in  Senator French's  amendment, but  he was                                                               
concerned  that the  wording would  cast too  wide a  barrier. He                                                               
explained that  the language  reads may  not include  a provision                                                               
relating to  the tax rate  applicable to the tax  rate applicable                                                               
to the  oil and gas production  tax under AS 43.55  as it relates                                                               
to the production of oil. So,  while he understands the desire is                                                               
to keep the oil  out of the contract in a  direct way, there will                                                               
be  some  indirect matters  that  will  have  to be  brought  up,                                                               
particularly  as  it  relates  to   the  manner  in  which  lease                                                               
expenditures are handled. They are  moving to the gross mechanism                                                               
for gas and yet still  going to have lease expenditures available                                                               
for deduction and  the calculation of oil  taxes. So, indirectly,                                                               
if anything is changed by the  legislature over the period of the                                                               
contract that  relates to  oil some indirect  things may  occur -                                                               
and they need to be provided  for. And this specific language may                                                               
cast too  wide of a  side board and  prevent them from  taking up                                                               
those indirect matters.                                                                                                         
                                                                                                                                
SENATOR  FAIRCLOUGH said  the  Finance  and Resources  Committees                                                               
talked  about  using a  healthy  oil  industry and  providing  an                                                               
incentive  to  apply  credits for  gas  development  against  oil                                                               
production.                                                                                                                     
                                                                                                                                
MR. BALASH  responded that  a healthy oil  business is  needed as                                                               
part of  the this  economic model  for commercialization  of gas;                                                               
right now  all of  their economics  are being run  as if  the oil                                                               
will carry the  costs of Prudhoe Bay and Pt.  Thomson and the gas                                                               
production is going  to be a revenue stream that  will be used in                                                               
the manufacture  of LNG.  So the cost  of operating  those fields                                                               
will remain deductible on the  oil side of the equation. However,                                                               
maybe  15 years  from now  maybe the  legislature will  decide to                                                               
deduct the  tax rate or  go to a  gross production tax  and those                                                               
kinds of  changes will have changes  on gas and that's  what they                                                               
need to make sure they don't erect  too high of an obstacle to be                                                               
able to deal with in the contracts to come.                                                                                     
                                                                                                                                
SENATOR  FAIRCLOUGH asked  if a  competitive  advantage could  be                                                               
lost by  adopting this amendment  now or would other  language be                                                               
better.                                                                                                                         
                                                                                                                                
4:29:39 PM                                                                                                                    
COMMISSIONER BALASH  said she was  correct about  our competition                                                               
in western Canada;  they have not developed the  fields that will                                                               
produce the  gas that will go  into the LNG projects  on the west                                                               
coast of Canada  and in that regard we enjoy  a certain advantage                                                               
having  the infrastructure  in place.  But out  infrastructure is                                                               
not cheap to  operate and they will need to  continue to be borne                                                               
by oil.  The question is  what is going  to happen over  the next                                                               
many years to the oil business  to keep that business healthy and                                                               
if it will have an indirect effect on the gas business.                                                                         
                                                                                                                                
SENATOR FRENCH said his concern  was having seen the Stranded Gas                                                               
Development Act  keeping the state  frozen in a structure  for 35                                                               
years and  he wanted to keep  the flexibility to raise  or lower,                                                               
if necessary, oil taxes. Oil is the life blood of the state.                                                                    
                                                                                                                                
SENATOR FAIRCLOUGH said  she and Senator Bishop would  take up an                                                               
analysis  of  what  the  state   is  giving  up  in  the  Finance                                                               
Committee.                                                                                                                      
                                                                                                                                
4:33:34 PM                                                                                                                    
SENATOR MICCICHE noticed the first  two sections on page 13, line                                                               
17,  where this  would  have  been inserted  -  "  'a, any,  the'                                                               
contract negotiated under this paragraph  to which the state is a                                                               
party  is not  affective  unless the  legislature authorizes  the                                                               
governor  to execute  the contract."  And  page 15,  line 9,  the                                                               
second  part  of  the  amendment  was going  to  be  added:  "'a'                                                               
contract  negotiated  under this  paragraph  -  any contract-  to                                                               
which  the  state  is  a   party  is  not  effective  unless  the                                                               
legislature authorizes  the governor to execute  the contract. If                                                               
there is any change  that is related to an oil  tax we would have                                                               
a look at it before it would be approved.                                                                                       
                                                                                                                                
4:35:36 PM                                                                                                                    
SENATOR FAIRCLOUGH  upheld her objection and  CHAIR GIESSEL asked                                                               
for  a  roll  call  vote: Senator  French  voted  yeah;  Senators                                                               
Bishop, Dyson, Fairclough, Micciche  and Chair Giessel voted nay;                                                               
therefore the Amendment 1 failed.                                                                                               
                                                                                                                                
4:35:43 PM                                                                                                                    
SENATOR FRENCH moved Amendment 2, version \N.2.                                                                                 
                                                                                                                                
                                                 28-GS2806\N.2                                                                  
                                                      Bullock                                                                   
                                                                                                                                
                          AMENDMENT 2                                                                                       
                                                                                                                                
     OFFERED IN THE SENATE              BY SENATOR FRENCH                                                                       
     TO:  CSSB 138(RES), Draft Version "N"                                                                                      
     Page 4, lines 13 - 14:                                                                                                     
          Delete "project labor agreements,"                                                                                    
                                                                                                                                
     Page 13, line 18, following "party":                                                                                   
          Insert                                                                                                                
               "(A)  must include a provision that requires                                                                 
     the  parties  to  the  contract  to  negotiate,  before                                                                
     construction, a project labor  agreement to the maximum                                                                
     extent   permitted  by   law;  in   this  subparagraph,                                                                
     "project   labor  agreement"   means  a   comprehensive                                                                
     collective  bargaining agreement  between the  licensee                                                                
     or its agent and  the appropriate labor representatives                                                                
     to ensure  expedited construction with  labor stability                                                                
     for the project by qualified residents of the state;                                                                   
               (B)"                                                                                                         
                                                                                                                                
     Page 15, line 10, following "party":                                                                                       
          Insert                                                                                                                
               "(A)  must include a provision that requires                                                                     
     the  parties  to  the  contract  to  negotiate,  before                                                                    
     construction, a project labor  agreement to the maximum                                                                    
     extent   permitted  by   law;  in   this  subparagraph,                                                                    
     "project   labor  agreement"   means  a   comprehensive                                                                    
     collective  bargaining agreement  between the  licensee                                                                    
     or its agent and  the appropriate labor representatives                                                                    
     to ensure  expedited construction with  labor stability                                                                    
     for the project by qualified residents of the state;                                                                       
               (B)"                                                                                                             
                                                                                                                                
SENATOR MICCICHE objected.                                                                                                      
                                                                                                                                
SENATOR  FRENCH explained  that  it is  a  simple amendment  that                                                               
inserts into  the body of the  bill the requirement of  a project                                                               
labor  agreement (PLA)  (language taken  from the  AGIA statute).                                                               
He  noted  the good  words  about  PLAs in  the  HOA  and in  the                                                               
findings section of the bill, but the  best place to put it is in                                                               
statute.  PLAs are  the  best way  to ensure  local  hire and  to                                                               
ensure the project stays on time and on line and on budget.                                                                     
                                                                                                                                
4:37:29 PM                                                                                                                    
SENATOR MICCICHE  said on page 4,  line 13, there is  a statement                                                               
about  "to   the  maximum  extent   permitted  by   law  contract                                                               
provisions  for project  labor agreements,  employment of  Alaska                                                               
residents,  contracts with  Alaska businesses  and provisions  to                                                               
work with state job centers  associated services and job training                                                               
services"  was mentioned.  They  also talked  about changes  that                                                               
bring  in language  from  the  HOA for  a  more  exact record  of                                                               
everything that  was signed  by all the  parties into  this bill.                                                               
Again,  he said  no  one  at the  table  favors  either union  or                                                               
nonunion workers.  This is  such a large  project that  union and                                                               
non-union  Alaskan workers  will  have all  of the  opportunities                                                               
they would ever  want to work on this project.  It's too early to                                                               
isolate that language in the bill.                                                                                              
                                                                                                                                
SENATOR FRENCH  remarked that  if you like  the idea  in findings                                                               
you should also like it in statute.                                                                                             
                                                                                                                                
SENATOR MICCICHE upheld his objections  and Senator Giessel asked                                                               
for  a  roll  call  vote: Senator  French  voted  yeah;  Senators                                                               
Bishop, Dyson, Fairclough, Micciche  and Chair Giessel voted nay;                                                               
therefore Amendment 2 failed.                                                                                                   
                                                                                                                                
4:40:26 PM                                                                                                                    
SENATOR FRENCH moved Amendment 3.                                                                                               
                                                 28-GS2806\N.3                                                                  
                                                      Bullock                                                                   
                                                                                                                                
                          AMENDMENT 3                                                                                       
                                                                                                                                
     OFFERED IN THE SENATE                BY SENATOR FRENCH                                                                     
     TO:  CSSB 138(RES), Draft Version "N"                                                                                      
                                                                                                                                
     Page 23, line 17, following "project":                                                                                 
          Insert "; the commissioner shall ensure that a                                                                    
       contract negotiated under this paragraph does not                                                                    
     authorize payments in lieu of taxes to a municipality"                                                                 
                                                                                                                                
     Page 24, line 24, following "project":                                                                                     
          Insert "; the commissioner shall ensure that a                                                                        
       contract negotiated under this paragraph does not                                                                        
     authorize payments in lieu of taxes to a municipality"                                                                     
                                                                                                                                
SENATOR DYSON objected.                                                                                                         
                                                                                                                                
SENATOR  FRENCH  explained  the purpose  behind  Amendment  3  is                                                               
similar to Amendment  1, to leave intact the  taxing authority of                                                               
municipalities across  whose land the pipeline  someday runs. The                                                               
idea is  to leave them  free to tax within  statutory boundaries;                                                               
it's a way to let them  deal with the impacts of construction and                                                               
operating  a  pipeline.  This  goes  back  to  the  Stranded  Gas                                                               
Development Act and the onerous  provisions that tied up not only                                                               
production  taxes, corporate  income tax  and royalties  but also                                                               
property taxes.  A letter from  Pedro van Meurs  discovered after                                                               
the Contract collapsed  to the Governor's Chief of  Staff said he                                                               
believed the                                                                                                                    
                                                                                                                                
     ...Concept  of  capping   municipal  taxes  of  general                                                                    
     application  is  totally  unnecessary.  Any  reasonable                                                                    
     evaluation  of the  municipal taxes  in Alaska  clearly                                                                    
     indicates that  the margin that municipalities  have to                                                                    
     create  taxes of  general application  is limited.  The                                                                    
     impact  of  variation  in municipal  taxes  of  general                                                                    
     application  on the  project  economics is  negligible.                                                                    
     Therefore,  in  my  opinion, municipalities  should  be                                                                    
     free to  tax as  they wish  and the  (producers) should                                                                    
     pay these taxes without limit.                                                                                             
                                                                                                                                
Just before  this paragraph he  had written a sentence  that many                                                               
remember: there's absolutely no need  to treat Alaska as a banana                                                               
republic in order to secure the gas line.                                                                                       
                                                                                                                                
CHAIR  GIESSEL offered  that the  intent language  in section  1,                                                               
(a)(5) speaks to  this with the intent that the  interests of the                                                               
state  and  local governmental  entities  must  be considered  in                                                               
contract  negotiations   to  protect  the  financial   and  other                                                               
interests  of the  state and  those local  governmental agencies.                                                               
They have heard loud and  clear from the municipalities that they                                                               
wish to be part of the negotiations.                                                                                            
                                                                                                                                
4:43:41 PM                                                                                                                    
SENATOR MICCICHE said his former job  before this one was to be a                                                               
mayor  of  a  small  town  and  Alaska  municipalities  that  are                                                               
impacted  by the  pipeline must  retain  the ability  to tax.  He                                                               
hoped the  negotiations were not  individual. But he  wasn't sure                                                               
the amendment got there.                                                                                                        
                                                                                                                                
SENATOR  FAIRCLOUGH said  they tried  to make  this clear  to the                                                               
administration when  the municipalities brought the  issue to the                                                               
committee during public  testimony. They are trying  to develop a                                                               
process where the municipalities  retain that taxing authority in                                                               
a similar process for each community  - not trying to limit their                                                               
ability but to come together in a group.                                                                                        
                                                                                                                                
SENATOR DYSON  maintained his objection  and Chair  Giessel asked                                                               
for  a  roll  call  vote: Senator  French  voted  yeah;  Senators                                                               
Bishop, Fairclough, Micciche, Dyson  and Chair Giessel voted nay;                                                               
therefore Amendment 3 failed.                                                                                                   
                                                                                                                                
4:47:02 PM                                                                                                                    
SENATOR FRENCH said he would  not offer Amendment 4, labeled \N.4                                                               
and offered Amendment 5.                                                                                                        
                                                 28-GS2806\N.5                                                                  
                                                      Bullock                                                                   
                                                                                                                                
                          AMENDMENT 5                                                                                       
                                                                                                                                
     OFFERED IN THE SENATE                 BY SENATOR RENCH                                                                     
     TO:  CSSB 138(RES), Draft Version "N"                                                                                      
                                                                                                                                
     Page 13, line 17, following "project;":                                                                                
          Insert "the licensee receiving the license issued                                                                 
     under  AS 43.90 or  an affiliate  of the  licensee that                                                                
     received the  license under  AS 43.90 may  not, without                                                                
     competitive  bidding, be  a party  to a  contract under                                                                
     this paragraph  that takes  effect after  the effective                                                                
     date of  this paragraph and  provides for the  state to                                                                
     acquire  an equity  interest in  a North  Slope natural                                                                
     gas project  or for  the transportation of  natural gas                                                                
     received  by  the  state as  royalty-in-kind  or  under                                                                
     AS 43.55.014;"                                                                                                       
                                                                                                                                
     Page 15, line 9, following "project;":                                                                                     
          Insert "the licensee receiving the license issued                                                                     
     under  AS 43.90 or  an affiliate  of the  licensee that                                                                    
     received the  license under  AS 43.90 may  not, without                                                                    
     competitive  bidding, be  a party  to a  contract under                                                                    
     this paragraph  that takes  effect after  the effective                                                                    
     date of  this paragraph and  provides for the  state to                                                                    
     acquire  an equity  interest in  a North  Slope natural                                                                    
     gas project  or for  the transportation of  natural gas                                                                    
     received  by  the  state as  royalty-in-kind  or  under                                                                    
     AS 43.55.014;"                                                                                                             
                                                                                                                                
SENATOR DYSON objected for explanation purposes.                                                                                
                                                                                                                                
SENATOR FRENCH  explained that this amendment  requires the state                                                               
to conduct a competitive bid  process before TransCanada can be a                                                               
party to the contract and addresses  what he thinks is a quandary                                                               
in the MOU that grants  them a significant role without examining                                                               
any other  option. They  need to  find out  what went  wrong with                                                               
AGIA before  inviting TransCanada  into this  project. He  has no                                                               
ill  will  toward  TransCanada   and  was  impressed  with  their                                                               
competence.                                                                                                                     
                                                                                                                                
4:48:59 PM                                                                                                                    
SENATOR FAIRCLOUGH asked how long that process would take.                                                                      
                                                                                                                                
SENATOR FRENCH said  he didn't have an answer. A  week or a month                                                               
he would hope.                                                                                                                  
                                                                                                                                
SENATOR FAIRCLOUGH  said she was a  no vote on the  AGIA license.                                                               
But there  was a  presentation last night  about the  question of                                                               
value of TransCanada to the project.  One of the values is trying                                                               
to reach a  market inside of 10  years and time is  of essence if                                                               
we want to  compete with other projects that are  trying to reach                                                               
the Asian market. She thought the  AGIA process took over a year,                                                               
and as  far as  TransCanada's partnership in  this issue  she was                                                               
going to be a no vote.                                                                                                          
                                                                                                                                
4:50:37 PM                                                                                                                    
SENATOR MICCICHE  said he wished  they would have  completed that                                                               
review process,  but no matter  what pipeline project  they would                                                               
have built 25 years ago, the  time value of money would have made                                                               
it at  a significant savings  today; even the wrong  choice could                                                               
have been adjusted.                                                                                                             
                                                                                                                                
4:52:41 PM                                                                                                                    
SENATOR BISHOP  said we  all go  back over  the failed  stops and                                                               
starts. Experts in the room say  there are less than a handful of                                                               
people in  the world that can  do this project; two  have already                                                               
been "kicked to  the curb" and the other three  and wondering why                                                               
they should come to the dance.                                                                                                  
                                                                                                                                
SENATOR DYSON  maintained his objection  and Chair  Giessel asked                                                               
for a roll call vote.  Senator French voted yeah; Senators Dyson,                                                               
Micciche,  Bishop, Fairclough  and  Chair Giessel  voted nay  and                                                               
Amendment 5 failed.                                                                                                             
                                                                                                                                
4:54:56 PM                                                                                                                    
CHAIR GIESSEL moved Amendment 6, labeled \N.6.                                                                                  
                                                 28-GS2806\N.6                                                                  
                                                      Bullock                                                                   
                                                                                                                                
                          AMENDMENT 6                                                                                       
                                                                                                                                
     OFFERED IN THE SENATE                   BY SENATOR GIESSEL                                                                 
     TO:  CSSB 138(RES), Draft Version "N"                                                                                      
                                                                                                                                
     Page 3, line 19:                                                                                                           
          Delete "(3)"                                                                                                          
          Insert "(4)"                                                                                                          
                                                                                                                                
     Page 3, line 23:                                                                                                           
          Delete "(4)"                                                                                                          
          Insert "(5)"                                                                                                          
                                                                                                                                
SENATOR MICCICHE objected to lighten the atmosphere and then                                                                    
removed his objection.                                                                                                          
                                                                                                                                
CHAIR GIESSEL announced that without further objection,                                                                         
Amendment 6 was adopted. She held SB 138 in committee.                                                                          
                                                                                                                                
4:55:54 PM                                                                                                                    
CHAIR GIESSEL found no further business to come before the                                                                      
committee and adjourned the Senate Resources Standing Committee                                                                 
meeting at 4:55 p.m.                                                                                                            

Document Name Date/Time Subjects
SRES enalytica 20140221.pdf SRES 2/21/2014 3:30:00 PM
SB 138 Amendment N.1.pdf SRES 2/21/2014 3:30:00 PM
SB 138
SB 138 Amendment N.2.pdf SRES 2/21/2014 3:30:00 PM
SB 138
SB 138 Amendment N.3.pdf SRES 2/21/2014 3:30:00 PM
SB 138
SB 138 Amendment N.5.pdf SRES 2/21/2014 3:30:00 PM
SB 138
SB 138 Amendment N.6.pdf SRES 2/21/2014 3:30:00 PM
SB 138