Legislature(2017 - 2018)BUTROVICH 205

03/17/2017 03:30 PM RESOURCES

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Audio Topic
03:30:03 PM Start
03:31:20 PM Presentation on Potential Lng Opportunities in Houston, Alaska
04:09:23 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentation on Potential LNG Opportunities in TELECONFERENCED
Houston, Alaska:
- Roger Purcell, Verne Rupright, Dave Nufer
-- Testimony <Invitation Only> --
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                         March 17, 2017                                                                                         
                           3:30 p.m.                                                                                            
                                                                                                                              
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Cathy Giessel, Chair                                                                                                    
Senator John Coghill, Vice Chair                                                                                                
Senator Shelley Hughes                                                                                                          
Senator Kevin Meyer                                                                                                             
Senator Bill Wielechowski                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                              
Senator Natasha von Imhof                                                                                                       
Senator Bert Stedman                                                                                                            
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Senator Mike Dunleavy                                                                                                           
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION: POTENTIAL LNG OPPORTUNITIES IN HOUSTON, ALASKA                                                                    
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
ROGER PURCELL, Senior Consultant                                                                                                
East-West Pacific Consulting, LLC                                                                                               
Knikatnu, Inc.                                                                                                                  
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT: Testified on the cost and environmental                                                                   
benefits of cogenerating gas systems.                                                                                           
                                                                                                                                
EDWARD WOODS, Territory Sales Manager                                                                                           
Dresser-Rand of Siemens AG Power and Gas                                                                                        
Germany                                                                                                                         
POSITION STATEMENT:  Proposed building a natural  gas facility in                                                             
Houston,  Alaska,   and  distributing  gas  to   multiple  Alaska                                                               
communities and industries.                                                                                                     
                                                                                                                                
ANDRE' GONTHIER, Director of Special Projects                                                                                   
Northstar Industries, LLC                                                                                                       
Liberty Energy Trust                                                                                                            
Conshohocken, PA                                                                                                                
POSITION STATEMENT:  Proposed building a natural  gas facility in                                                             
Houston,  Alaska,   and  distributing  gas  to   multiple  Alaska                                                               
communities and industries.                                                                                                     
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:30:03 PM                                                                                                                    
CHAIR  CATHY   GIESSEL  called  the  Senate   Resources  Standing                                                             
Committee meeting  to order at 3:30  p.m. Present at the  call to                                                               
order  were Senators  Hughes, Meyer,  Wielechowski, Coghill,  and                                                               
Chair  Giessel.   The  committee  was  also   joined  by  Senator                                                               
Dunleavy.                                                                                                                       
^Presentation on Potential LNG Opportunities in Houston, Alaska                                                                 
                                                                                                                                
           Presentation: Potential LNG Opportunities                                                                        
                       in Houston, Alaska                                                                                   
                                                                                                                                
3:31:20 PM                                                                                                                    
CHAIR  GIESSEL said  the only  order  of business  today was  the                                                               
presentation on a  proposal to bring liquified  natural gas (LNG)                                                               
to the Interior  and other parts of the state,  at the request of                                                               
Senator Dunleavy.  She noted  that Dave  Nufer and  former mayors                                                               
Roger Purcell and Verne Rupright  were also present. She recalled                                                               
that SB  23, passed in  2013, proposed  moving LNG by  truck from                                                               
the  North  Slope  to  Fairbanks,  and SB  50,  passed  in  2015,                                                               
expanded the  scope of AIDEA  [Alaska Industrial  Development and                                                               
Export Authority]  to look  at other basins  for sources  of gas,                                                               
such as Cook Inlet. Since the  passage of the bill, the committee                                                               
has been awaiting  an update from the  administration, which will                                                               
come  later this  session.  In the  meantime,  there are  several                                                               
proposals  of different  methods  to convey  natural  gas to  the                                                               
Interior, and today the committee will hear one of them.                                                                        
                                                                                                                                
3:31:40 PM                                                                                                                    
ROGER PURCELL,  Senior Consultant, East-West  Pacific Consulting,                                                               
LLC, Knikatnu, Inc., Wasilla, said this  he is a former mayor. He                                                               
stated that this  a very important issue for the  City of Houston                                                               
and the entire state.                                                                                                           
                                                                                                                                
EDWARD WOODS,  Territory Sales Manager, Dresser-Rand,  Siemens AG                                                               
Power and Gas,  Germany, said he is proposing LNG  for Alaska and                                                               
is supporting  the statewide transition  from imported  diesel to                                                               
domestic energy for the state.                                                                                                  
                                                                                                                                
3:33:53 PM                                                                                                                    
MR. WOODS said  natural gas is domestic, and  diesel is imported.                                                               
Gas  is also  more cost  effective  and has  lower emissions.  He                                                               
referred to  his slide  and said natural  gas has  virtually zero                                                               
particulate  emissions  when  compared  to coal  and  diesel.  He                                                               
explained  that LNG  is  liquified natural  gas.  A "beach  ball"                                                               
volume of natural  gas chilled to minus 260  degrees would reduce                                                               
the volume to  the dimensions of a ping pong  ball. In its liquid                                                               
state, it can be easily  transported; it can then be re-vaporized                                                               
to its natural  gas state for use in natural  gas engines and for                                                               
cooking and heating appliances.                                                                                                 
                                                                                                                                
3:34:07 PM                                                                                                                    
MR. WOODS said that natural gas  is safe and non-flammable in its                                                               
liquid  state. One  could put  a  lit cigarette  into it  without                                                               
creating a  fire, he explained.  It requires an intense  spark to                                                               
ignite. It  is non-toxic, and  a cookie  could be dropped  into a                                                               
glass of LNG  and then eaten. "It vaporizes," he  said. It can be                                                               
put on water, and when it vaporizes, the water can be drunk.                                                                    
                                                                                                                                
MR. WOODS said he is here  to talk about the technology developed                                                               
by Siemens,  originally Dresser-Rand.  Siemens has a  modular gas                                                               
liquefaction  facility  that  uses  the modular  format  for  gas                                                               
clean-up,  power generation,  and  liquefaction,  and then  "that                                                               
liquid  gets  taken  into  storage   and  dispensing,  and  we're                                                               
proposing into ISO-storage tanks," which he will explain later.                                                                 
                                                                                                                                
3:35:13 PM                                                                                                                    
MR. WOODS said the bottom line  is that it's a scalable platform.                                                               
Each "LNGo system" consumes a  100-foot by 100-foot footprint and                                                               
can start making liquids within  one year of papers being signed.                                                               
The system  will produce  30,000 gallons per  day, he  said. When                                                               
the need  for LNG rises,  modules can be added.  For engineering,                                                               
development, and operation, Dresser-Rand  has a relationship with                                                               
Northstar Industries of Boston, which  is a leader in natural gas                                                               
and LNG;  "natural gas  in the form  of metering  and manifolding                                                               
natural gas compressor  stations and so forth." On  the LNG side,                                                               
they  are   experts  in  looking   at  proposed   operations  and                                                               
dispersion models and safeties for  the site development, as well                                                               
as  the cryo-equipment  needed for  the  hoses to  load the  ISO-                                                               
containers. Northstar  Industries is 51 percent  owned by Liberty                                                               
Energy Trust, an  energy equity firm that is  looking at projects                                                               
such as this for private investment.                                                                                            
                                                                                                                                
MR. WOODS said Houston is the  ideal location. It has 1,000 acres                                                               
that are zoned  heavy industrial, which is  appropriate for their                                                               
system. He  said the LNGo  system is quiet;  at 72 decibels  at 3                                                               
feet, his speaking voice is  likely louder. It has low emissions,                                                               
as it is a half-gram engine  driving and powering the site. Also,                                                               
the gas that comes in is cleaned  up and that clean gas goes into                                                               
the liquefaction,  so it's high-purity  methane, and it  is great                                                               
for engines  and allows  stable engine  operation over  time. The                                                               
tail gases  are consumed  in the power  generation, he  said, and                                                               
they are burned in the half-gram  engines. There is no venting or                                                               
flaring, he explained.                                                                                                          
                                                                                                                                
MR.  WOODS said  his project  would use  a portion  of the  heavy                                                               
industrial zone  in Houston, and  there is rail  for transporting                                                               
the gas,  which will come  from multiple sources.  "We're looking                                                               
at a  couple of firms that  are operating in the  Cook Inlet area                                                               
as well as  some local coalbed methane resources  on the property                                                               
and adjacent to  it." The presence of the rail  doesn't take away                                                               
from the availability of the road  access where LNG can be put on                                                               
trailers and distributed out.                                                                                                   
                                                                                                                                
3:38:13 PM                                                                                                                    
MR. WOODS sees Houston as a  hub and the Alaska Railroad as being                                                               
the  primary  spoke  for  getting  the gas  to  market.  He  sees                                                               
Fairbanks  as  storage,  he  said,  to  support  phase  1  and  2                                                               
expansions.  Phase 1  expansion is  targeted be  1 billion  cubic                                                               
feet  per  year, he  stated,  and  that is  approximately  30,000                                                               
gallons a day, which is appropriate to onea LNGo system.                                                                        
                                                                                                                                
MR. WOODS  said worked on  power generation with  Caterpillar. He                                                               
understands  that  lives  depend  on  those  diesel  engines  for                                                               
creating  power  and keeping  people  warm.  With that  in  mind,                                                               
Dresser-Rand is  looking at  installing a  second LNGo  unit into                                                               
this  project for  when components  need to  be brought  down for                                                               
service  and maintenance.  The project  would include  taking the                                                               
LNG  to Fairbanks,  using that  rail  as the  primary spoke,  and                                                               
supporting  Fairbanks with  their  phase 1  and  2 expansions  to                                                               
allow additional  customers on that  gas network but also  use it                                                               
as a hub to take LNG out via  the road spokes to remote mines and                                                               
communities.  The LNG  could also  go south  on the  rail to  the                                                               
ports of Whittier  and Seward and be put on  marine vessels to go                                                               
to other mines and communities.                                                                                                 
                                                                                                                                
3:40:18 PM                                                                                                                    
MR.  WOODS  said  that  Hitachi has  been  very  instrumental  in                                                               
supporting  the  development  of ISO-format  containers  for  LNG                                                               
tanks. Hitachi  has been  supporting the  distribution of  LNG by                                                               
rail in Japan  for over 30 years and is  bringing that experience                                                               
to Alaska, he  explained. Mr. Woods said he covers  the entire US                                                               
for Dresser-Rand  on the  LNGo, and  he is  very excited  to help                                                               
support Alaska in being the  leader in getting LNG distributed by                                                               
rail. He  welcomed the opportunity for  this to be the  model for                                                               
the rest of the US.                                                                                                             
                                                                                                                                
3:41:16 PM                                                                                                                    
MR. WOODS  said Fairbanks is  one potential consumer and  may use                                                               
[LNG] to generate power. The  diesel engines are a trusted source                                                               
for the community,  he noted. Earlier in the week  he talked with                                                               
energy  managers from  over 80  Alaska villages  and communities,                                                               
and  he  proposed  using Dresser-Rand  micro-grid  services  from                                                               
Germany  to   help  better  integrate   the  natural   gas  power                                                               
generation systems  as a side-by-side  with the  diesel generator                                                               
sets, leaving  the diesel set  until it is demonstrated  that LNG                                                               
can be  a source of energy  for those communities. To  better use                                                               
natural  gas, he  said, they  are also  proposing that  hot water                                                               
from the engines  be used in a combined heat  and power format to                                                               
heat community  buildings and to  support clean water  and sewage                                                               
treatment plants in the communities.                                                                                            
                                                                                                                                
3:42:52 PM                                                                                                                    
MR. WOODS  said that once LNG  is in the communities,  a gas line                                                               
can  be installed  for residential  use. Industries  like mining,                                                               
fisheries,  and forestry  can also  use natural  gas, he  stated.                                                               
Diesel prices are volatile and  are very high compared to natural                                                               
gas.  "Coming from  a  welding shop  in  Montana, supporting  the                                                               
mining  industry," he  surmised that  a  mine may  be looking  at                                                               
shuttering  because diesel  prices are  too high.  Stable natural                                                               
gas prices could extend the life  of that mine, or it could allow                                                               
a new one to open in Alaska.                                                                                                    
                                                                                                                                
3:44:19 PM                                                                                                                    
MR. WOODS  said he is proposing  the use of a  Yanmar natural gas                                                               
generator set,  35-kilowatt output,  for the  smaller communities                                                               
and a Dresser-Rand Wascore generator set for larger ones.                                                                       
                                                                                                                                
3:44:33 PM                                                                                                                    
MR. WOODS summarized that the  technology is available, and there                                                               
is this wonderful  hub-and-spoke system with a  prime location in                                                               
Houston,  which has  cost effective  rail to  transport that  LNG                                                               
throughout the  state, leading  to demand  and efficient  use for                                                               
domestic energy within  the state. The benefits  are economic, as                                                               
well  as improved  health by  reducing the  soot and  particulate                                                               
pollution from diesel engines.  From an environmental standpoint,                                                               
natural  gas has  less impacts  than diesel.  "The pieces  are in                                                               
place, and  we ask for  your support in the  statewide transition                                                               
from imported diesel to the domestic fuel of natural gas."                                                                      
                                                                                                                                
3:45:37 PM                                                                                                                    
SENATOR DUNLEAVY  asked if he  needs funding or tax  credits from                                                               
the state.                                                                                                                      
                                                                                                                                
ANDRE'  GONTHIER, Director  of Special  Projects, Liberty  Permit                                                               
Energy Infrastructure  Fund, Northstar Industries, said  they are                                                               
not  asking for  financial support  now.  He said  that with  the                                                               
right contracts, the project can  use private investments. As the                                                               
business plan  is firmed up,  the project may  consider available                                                               
tax benefits, but  they are not asking for  any special treatment                                                               
now. If the  use of diesel decreases, subsidies  are reduced, and                                                               
lower-cost natural  gas can enhance  the lives of  many Alaskans,                                                               
he stated.                                                                                                                      
                                                                                                                                
SENATOR COGHILL said it looks like  some of this is contingent on                                                               
road  and rail  access,  which  are things  that  the state  gets                                                               
involved  in. He  asked  if  the presenters  have  talked to  the                                                               
department  of transportation  and the  railroad. "It  looks like                                                               
you would have to have some completion on that."                                                                                
                                                                                                                                
MR. WOODS  answered that there  is a railroad siting  adjacent to                                                               
the property, and there is a  letter in the committee packet from                                                               
the Alaska  Railroad that expresses  interest in  supporting this                                                               
project. He said  the primary distribution of the  LNG is through                                                               
railroad,  and  roads to  the  site  will  be  used to  bring  in                                                               
equipment. In  supporting the  Fairbanks natural  gas expansions,                                                               
there would be  zero additional trucks transporting  LNG from the                                                               
south to Fairbanks with this proposal.                                                                                          
                                                                                                                                
3:49:11 PM                                                                                                                    
SENATOR COGHILL  noted that  the railroad  is already  working on                                                               
this, "but  there would be  a completion factor." He  asked about                                                               
the  sources of  gas. Gas  supply has  been one  of the  question                                                               
marks in Fairbanks.                                                                                                             
                                                                                                                                
MR.  GONTHIER replied  that they  have  ongoing discussions  with                                                               
Hilcorp Pipeline  Transmission Company, but the  negotiations are                                                               
still  progressing. He  has spoken  with other  land holders  who                                                               
hold rights to coal bed methane.                                                                                                
                                                                                                                                
SENATOR  COGHILL said  the Interior  Energy  Project always  says                                                               
that gas  supply and  contracts are imminent,  but that  talk has                                                               
been going on for several months.  "That's going to be one of the                                                               
tougher points," he added. He  said he likes private investments.                                                               
He asked  about the ISO  containers and the current  market. What                                                               
is available now and what is  the lead time to get something that                                                               
a railroad could carry? He said  he will have to compare the cost                                                               
of storing diesel versus gas.                                                                                                   
                                                                                                                                
3:50:47 PM                                                                                                                    
MR. WOODS answered that they are  looking at a one-year lead time                                                               
from signing  of the project to  first liquids. They see  phase 1                                                               
expansion of Fairbanks plus mining  and village demand to support                                                               
two 30,000-gallon LNGo systems. He  said that upon signing of the                                                               
project  and while  preparing  the ground;  getting  the iron  in                                                               
place, including storage tanks; working  with the railroad to get                                                               
that completed,  which is all  very achievable within  the stated                                                               
timeframe,  they   would  be  working  with   Hitachi  to  ensure                                                               
sufficient ISO containers are available.                                                                                        
                                                                                                                                
3:52:09 PM                                                                                                                    
SENATOR COGHILL said  that was great. They need to  be ported in,                                                               
he said, and he asked if it would be through Port MacKenzie.                                                                    
                                                                                                                                
MR. WOODS answered that equipment  and ISO tanks would be brought                                                               
in by barge, most likely from  Seattle to Whittier or Seward, and                                                               
trucks  or railroad  would take  them to  the job  site. The  ISO                                                               
containers would come from Japan  where Hitachi has manufacturing                                                               
operations. He added that it  would be appropriate to have enough                                                               
storage to  support the  seasonal demand  swings, and  no storage                                                               
volume has been  identified yet, but that would  be determined by                                                               
Northstar Industries.                                                                                                           
                                                                                                                                
MR.  GONTHIER   added  that   earlier  this   week,  Dresser-Rand                                                               
discussed  a plan  with FNG  [Fairbanks Natural  Gas] to  have an                                                               
energy center in  Houston with LNG storage, and that  it may make                                                               
sense to  help FNG  with their  five-day storage  requirement. It                                                               
would be  wise to have one  field-directed tank at the  hub and a                                                               
smaller one up north. The volumes  that FNG talked about are much                                                               
larger  than the  ISO container,  so it  wouldn't make  sense for                                                               
them to have five-day storage  just stacking up those containers.                                                               
It would be more economic to have it in a larger vessel.                                                                        
                                                                                                                                
SENATOR COGHILL said  it is nice that the state  wouldn't have to                                                               
figure  out the  nuts and  bolts; a  private investor  would. "If                                                               
you're willing to  take the risk," he said, "I'm  game." He liked                                                               
the idea of generator sets. He  asked about servicing a whole new                                                               
storage set and generator set.                                                                                                  
                                                                                                                                
3:55:18 PM                                                                                                                    
MR. WOODS  said service,  maintenance, and  support is  in place.                                                               
The  Yanmar  generator  set  impresses him.  It  has  a  one-year                                                               
service interval, so it can run  one year before it is taken down                                                               
for  an  oil  and  spark  plug change.  A  larger  generator  set                                                               
requires maintenance  every 1,000  hours. For the  smaller remote                                                               
communities, that one-year service  interval is ideal, he stated.                                                               
It can be at  a time of convenience, at a point  of low use, with                                                               
minimal or no impact to the community.                                                                                          
                                                                                                                                
MR. WOODS said  the larger generator sets  have configurations of                                                               
"N plus 1," meaning the number  of generator sets that are needed                                                               
plus one that  can be brought down for  service. Dresser-Rand has                                                               
field service personnel based throughout  the state and has rapid                                                               
dispatch  for support.  There is  a service  team now  that takes                                                               
care  of combustion  turbines on  the North  Slope and  have been                                                               
known to respond within one day, he said.                                                                                       
                                                                                                                                
3:57:21 PM                                                                                                                    
SENATOR COGHILL said  having natural gas in Alaska  is great, but                                                               
it is painful for the  Interior, because Fairbanks is between two                                                               
gas fields. Trying  to get a secure supply that  is not the last-                                                               
in and first-out  will always be a problem. He  said that FNG has                                                               
a  contract  now, and  he  asked  if  Dresser-Rand is  in  direct                                                               
competition with  them or  in synergy.  He said  he is  fine with                                                               
competition to bring down prices, but he is curious.                                                                            
                                                                                                                                
3:58:14 PM                                                                                                                    
MR.  GONTHIER replied  that the  project can  work with  them and                                                               
would love  to have them  as a customer. There  are opportunities                                                               
to work with  them using their existing contracts  for supply and                                                               
do  a tolling-type  model, where  Dresser-Rand  could take  FNG's                                                               
supplies and liquefy them and deliver  them back. Or they can use                                                               
the model of  being the supplier from start to  finish and have a                                                               
turnkey delivery back to them. "Right  now, we don't want to come                                                               
in and  say we want to  take these guys  off the map; we  want to                                                               
work with them. Our interest is for everyone to benefit here."                                                                  
                                                                                                                                
MR.  WOODS added  that Fairbanks  is  receiving a  supply of  LNG                                                               
right  now,  but  Dresser-Rand   is  looking  at  supporting  and                                                               
facilitating the phase 1 and  2 expansions of FNG. They currently                                                               
have a  source, but Dresser-Rand is  offering additional capacity                                                               
so FNG can expand their customer  base. The pipe is in the ground                                                               
and they are  ready to make connections. "So, we  can support the                                                               
expansion of  that gas network, connections  within the Fairbanks                                                               
gas network, helping  bring down the emissions  that are plaguing                                                               
that area, as well as provide  a competitive natural gas for that                                                               
community."                                                                                                                     
                                                                                                                                
4:00:17 PM                                                                                                                    
SENATOR DUNLEAVY  said Roger  Purcell asked to  meet, and  he has                                                               
heard  a  thousand  variations  of gas  projects.  He  asked  Mr.                                                               
Purcell what it  will cost the state and was  told, "Nothing." It                                                               
is  hard  to  believe,  but  the project  won't  cost  the  state                                                               
anything. He said  they talked about the  ISO shipping containers                                                               
that  have been  used  in Japan  for 30  years,  and the  concept                                                               
became even  more intriguing,  because gas does  not have  the 12                                                               
percent CO2  like on the  Slope-it's almost pure gas.  Houston is                                                               
not that far from the source of  the gas, and it is an industrial                                                               
area. He said he liked the  idea of moving propane to villages on                                                               
barges, but he  doesn't know how long the  containers would last.                                                               
Also, if  the state  has a  large-diameter pipeline,  there might                                                               
not need  to be  certain take-outs, which  could lower  costs and                                                               
increase revenue  for overseas  shipping. They  could potentially                                                               
have two  gas concepts  going on  in the  state: one  coming from                                                               
Cook Inlet  going north by  train and  truck and one  going south                                                               
for export. In  the end, there is  no cost. Going all  the way to                                                               
North  Pole with  a container  instead  of building  out pipe  to                                                               
Fairbanks is  an intriguing concept  and kind of hard  to believe                                                               
that there will be no cost.                                                                                                     
                                                                                                                                
4:03:03 PM                                                                                                                    
SENATOR HUGHES said she appreciated  their presentation and asked                                                               
what they  envision for  the rest of  the state.  What percentage                                                               
might be going to Fairbanks and to other communities?                                                                           
                                                                                                                                
MR. WOODS said the term for  moving LNG out to communities is the                                                               
"virtual  pipeline."  Relative  to  propane,  LNG  has  important                                                               
values. Propane  boils at -25F  and can  be used for  cooking and                                                               
heating above that temperature.  But with lower temperatures, the                                                               
propane tank needs supplemental heating.                                                                                        
                                                                                                                                
NR. WOODS  said that the  capacity of  the LNGo system  is 30,000                                                               
gallons a  day per unit, and  the Fairbanks phase 1  expansion is                                                               
to  be one  billion cubic  feet per  year, which  translates into                                                               
approximately  30,000  gallons  per  day. So,  one  system  would                                                               
support  Fairbanks-the  anchor  tenant-and a  second  unit  would                                                               
support  other communities  in Alaska.  There  would be  seasonal                                                               
swings, so  there may be  some up and  down. Further on  they may                                                               
say, "We're going  to have a base demand in  Fairbanks, and we're                                                               
going to  look at that rail  corridor, and we're going  to go out                                                               
200  miles beyond  that rail  corridor by  road. Let's  call that                                                               
zone 1." It will have easy  access, it will be relatively easy to                                                               
develop, he explained, and it  will have year-round loads to take                                                               
care of those communities. There is  then getting the LNG down to                                                               
the ports  and distributing  it by  vessel to  remote communities                                                               
out past  Kodiak and  300 miles to  the west,  supporting coastal                                                               
communities and industries.                                                                                                     
                                                                                                                                
4:06:07 PM                                                                                                                    
MR. WOODS referred to iced-in  communities, like Bethel and Nome,                                                               
which will  require a strategy.  That is still being  modeled but                                                               
may include  building a storage  tank or storing  ISO containers,                                                               
but every effort will be made to get LNG out to those customers.                                                                
                                                                                                                                
SENATOR HUGHES asked  Mr. Purcell about the  monthly savings from                                                               
the system.                                                                                                                     
                                                                                                                                
4:07:14 PM                                                                                                                    
MR.  PURCELL said  Knikatnu installed  a  Yanmar 35  cogeneration                                                               
power plant seven  months ago, and electric bills  went down from                                                               
a high  of $4,500 per month  to $201 last month.  It produces not                                                               
just  electricity, which  dropped  below $.08  per kilowatt  hour                                                               
(kwh)  from $.19,  but  it  also creates  about  200 gallons  per                                                               
minute of  190-degree water, so  now the building is  heated with                                                               
that water. "So,  actually our costs of  energy for manufacturing                                                               
it did not go up substantially  enough to make a difference; it's                                                               
the great decrease  of the actual electricity." It  is running in                                                               
Wasilla and  is proving itself.  It has lasted the  whole winter,                                                               
he said, which  was 20 percent colder than  previous years. There                                                               
are also  two systems in  Yakutat using propane, and  prices went                                                               
from $.43  per kwh down  to $.10, plus  the heat, he  noted. That                                                               
has  been  running  over  a  year  now.  So,  these  cogeneration                                                               
machines  have been  tested and  are working  well. "It  is being                                                               
looked  at," he  said, in  a  lot more  locations throughout  the                                                               
state.  He  said  to  imagine  schools,  hospitals,  and  clinics                                                               
reducing energy  consumption in  rural areas  or even  in Mat-Su,                                                               
where more teachers could be employed with the savings.                                                                         
                                                                                                                                
SENATOR HUGHES said  that is what she was  thinking, because that                                                               
is  one of  the huge  costs of  education. "I  would love  to see                                                               
natural gas in these communities-and these units," she added.                                                                   
                                                                                                                                
4:09:23 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair Giessel  adjourned the  Senate Resources  Committee meeting                                                               
at 4:10 p.m.                                                                                                                    

Document Name Date/Time Subjects
Agenda-3-17-17.pdf SRES 3/17/2017 3:30:00 PM
1. SRES - Letter on Houston AK LNG Project - 3 - 16 - 17.pdf SRES 3/17/2017 3:30:00 PM
LNG
2. SRES - Presentation on Houston AK LNG Project - 3 - 17 - 17.pdf SRES 3/17/2017 3:30:00 PM
LNG