Legislature(2017 - 2018)BUTROVICH 205
01/23/2017 03:30 PM Senate RESOURCES
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| Audio | Topic |
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| Start | |
| Aklng Project Update | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
January 23, 2017
3:30 p.m.
MEMBERS PRESENT
Senator Cathy Giessel, Chair
Senator Natasha von Imhof
Senator Bert Stedman
Senator Shelley Hughes
Senator Kevin Meyer
Senator Bill Wielechowski
MEMBERS ABSENT
Senator John Coghill, Vice Chair
COMMITTEE CALENDAR
AKLNG PROJECT UPDATE
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
BILL MCMAHON, Sr. Commercial Advisor
ExxonMobil Corporation
POSITION STATEMENT: Provided ExxonMobil's perspective on the
AKLNG Project.
DAMIAN BILBAO, Vice President
Commercial Adventures
BP Alaska
POSITION STATEMENT: Provided BP's perspective on the AKLNG
Project.
DARREN MEZNARICH, Manager
North Slope Gas
ConocoPhillips Alaska
POSITION STATEMENT: Provided ConocoPhillips' perspective on the
AKLNG Project.
KEITH MEYER, President
Alaska Gasline Development Corporation (AGDC)
POSITION STATEMENT: Presented AKLNG Project update.
FRANK RICHARDS, Senior Vice President
Program Management
Alaska Gasline Development Corporation (AGDC)
POSITION STATEMENT: Presented AKLNG Project update.
FRITZ KRUSEN, Vice President, Alaska LNG
Alaska Gasline Development Corporation (AGDC)
Anchorage, Alaska
POSITION STATEMENT: Presented AKLNG Project update.
LEIZA WILCOX, Vice President
Alaska Gasline Development Corporation (AGDC)
Anchorage, Alaska
POSITION STATEMENT: Presented AKLNG Project update.
STEVE WRIGHT
Upstream Project Manager for AKLNG
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: Presented AKLNG Project update.
ACTION NARRATIVE
3:30:37 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 Meyer, Hughes, von Imhof, Wielechowski,
Stedman, and Chair Giessel.
^AKLNG Project Update
AKLNG Project Update
3:33:44 PM
CHAIR GIESSEL announced the only order of business today would
be the AKLNG Project update. Nearly three years ago, she said,
the legislature passed SB 138, putting in place the framework
for the Alaska LNG Project (AKLNG). This is the latest attempt
to monetize the state's ample North Slope natural gas and make
it available for the people of the state. Section 77 of that
bill required the parties to the project to brief the
legislature on its progress and this is one of those updates.
There have been seven quarterly updates so far.
She said throughout the many turns this project has taken since
the bill passed and the many changes in personnel, these updates
have been the venue most often through which policy makers,
stakeholders, and the public view the status of this pipeline.
Today's agenda will start with an overview of the AKLNG Project
and status report of the Alaska Stand Alone Pipeline (ASAP).
CHAIR GIESSEL recognized that a long-term participant of this
venture, Dan Fauske, was recovering from surgery and wished him
well on a speedy recovery.
3:35:19 PM
She said that seven months ago, the new president of the Alaska
Gasline Development Corporation (AGDC), Mr. Keith Meyer, came
before this committee and proposed a change of direction whereby
the State of Alaska would transition from being a member of a
joint venture (JV) to being the sole member of that joint
venture. Over the last few months, that transition has begun,
and she understands the private companies associated with AKLNG
- ExxonMobil, BP, and ConocoPhillips - have left the venture.
Today, they will hear one last time from those companies as well
as the relevant representatives from the state gas team leads on
AKLNG. She welcomed Mr. McMahon, a member of the original JVA,
to orient the committee to where the venture stands now.
3:36:33 PM
BILL MCMAHON, Sr. Commercial Advisor, ExxonMobil Corporation,
said he has worked since 1992 on commercializing natural gas and
has 34 years of experience with ExxonMobil. His testimony was in
two parts. The first part is on behalf of the AKLNG Project and
its four participants - AGDC, ExxonMobil, BP and ConocoPhillips.
The four parties have worked hard to complete the technical and
regulatory hand over and the commercial transition of AKLNG to a
state LNG project run by AGDC and he would share that progress
since September. The second part of his testimony is sharing
ExxonMobil's perspectives on a state LNG project and how they
will support the AGDC effort. Following his testimony, the
presenters from BP and ConocoPhillips will share their
perspectives.
3:37:57 PM
Following the administration's decision to pursue a state LNG
project, ExxonMobil, as lead party under the pre-FEED Joint
Venture Agreement (JVA), completed an extensive handover process
with AGDC for all the pre-FEED JVA work products including the
underlying technical data and information, Mr. McMahon said. In
addition, on behalf of the applicants in the Federal Energy
Regulatory Commission (FERC) pre-filing, ExxonMobil also met
with regulators and AGDC to discuss the coming changes. On
January 4th, the FERC was advised by letter that ExxonMobil, BP,
and ConocoPhillips had withdrawn from the pre-file docket
leaving AGDC as the sole applicant.
During testimony on August 25, the key components of the
technical and regulatory handover and the commercial transition
were shared with the committee, and the following are the
achievements since that time. All 77 pre-FEED deliverables
agreed to under the AKLNG Project JVA are finished and have been
distributed to AGDC, ExxonMobil, BP, and ConocoPhillips. The
final two draft resource reports, number 11 and number 13, were
submitted by the applicants to FERC thus completing the draft
resource reports required to advance the Environmental Impact
Statement (EIS) pre-file process. FERC and the other
coordinating agencies have provided over 2,700 comments on the
12 resource reports that have been submitted. The AKLNG Project
team provided a summary of all the comments and questions to all
the parties, including AGDC. It also completed dozens of project
technical and regulatory handover sessions with AGDC including
weekly sessions and extended workshops. These handover sessions,
which were completed prior to year-end 2016, provided a smooth
and efficient handover of activities to AGDC for a state LNG
project. AGDC is now positioned to take on full responsibility
for the technical and regulatory aspects of its project.
MR. MCMAHON said agreements were executed prior to year-end as
part of the commercial transition from AKLNG to a state LNG
project. These agreements provided for the use of historical and
pre-FEED data and information by all the pre-FEED JVA parties
for any project including a state LNG project.
Work continues on the agreements for AGDC to acquire ownership
of an LLC held by ExxonMobil, BP, and ConocoPhillips affiliates
and provide interim access to some of its assets. The LLC owns
land in Nikiski and the Department of Energy (DOE) LNG export
authorizations.
3:41:15 PM
MR. MCMAHON paused for questions before moving on to his
ExxonMobil comments.
CHAIR GIESSEL said the land and DOE authorizations have a value
and asked if what the state would pay for possessing those two
items is part of the hold-up in completing the transfer.
MR. MCMAHON answered that is one of the aspects of the LLC
transaction. Those negotiations continue, and progress is being
made.
3:41:57 PM
Changing hats, Mr. McMahon shared ExxonMobil's perspectives on a
state LNG project and how ExxonMobil is supporting the AGDC
effort.
One of the motivations for the administration to assume control
of the project was to assess the potential advantages that may
only be available to a state project. These potential advantages
as expressed by the administration, include reducing the cost of
supply through a tax-exempt project structure and using low-cost
funds from third party investors willing to take a utility rate
of return on a government-backed project. Both opportunities
could potentially make a significant reduction in the cost of
supply of Alaska LNG (as highlighted in the Wood Mackenzie study
commissioned by AGDC, ExxonMobil, BP, and as was presented to
this committee by David Barrowman of Wood Mackenzie on August
24). Cost of supply is a key measure of global competitiveness
in the LNG market, he said.
In addition to opportunities to reduce cost of supply, a state-
backed LNG project also has the potential to reduce regulatory
risk through government-to-government cooperation. ExxonMobil
wants a project to succeed, Mr. McMahon said, and is willing to
pursue all commercially viable alternatives to develop Alaska
gas resources upon mutually agreed terms. While AGDC is now
responsible for advancing a state LNG project, ExxonMobil will
still have a major role in the development of Alaska North Slope
natural gas: first through continued investment at Prudhoe Bay
and Pt. Thomson, and second by making gas available for sale for
the project. To date, the producers have invested billions of
dollars at Prudhoe Bay and Point Thomson to successfully develop
these fields. Investments continue at these field to support
their ongoing operation.
3:44:36 PM
MR. MCMAHON said ExxonMobil will continue to make its gas
available to any project under bi-laterally, mutually-agreed,
and commercially reasonable terms. In 2015, when Governor Walker
sought assurances from each producer about gas availability,
ExxonMobil immediately established a negotiating team, executed
confidentiality agreements with the administration, and had
several preliminary meetings. With completion of the handover to
a state LNG project, ExxonMobil remains ready to reengage on
negotiations for gas sales and purchase agreements. These
commercial and fiscal terms will need to be predictable and
durable, so all the parties involved, including potential buyers
and financiers, understand the underlying framework,
particularly given the magnitude of the required investments and
commitments, which are measured over decades.
In closing, Mr. McMahon said ExxonMobil wants to help make a
state LNG project successful. They are pleased to have
participated in a successful handover from AKLNG to a state
project and they are committed to working towards completion of
the required transactions with AGDC on the LLC; they are ready
to re-start bi-lateral discussions on purchasing ExxonMobil gas
from Prudhoe Bay and Point Thomson. If AGDC can adequately
achieve cost reductions, secure regulatory approvals, advance
through the project gates to a final investment decision (FID)
and complete project execution and construction, everyone will
benefit.
3:46:02 PM
SENATOR STEDMAN asked what kind of manpower was involved in this
project.
MR. MCMAHON answered that there were 120 people on the project
management team and a "myriad of contractors."
SENATOR MEYER noted that the governor says the buyers of the gas
will help provide the financing for building the pipeline. So,
it seems that the buyers of the gas who are providing the
capital are going to want that gas at the lowest price possible.
But the producers of the gas are going to want to maximize the
value of that gas. He asked if there will be a conflict between
the producers who want to maximize the price and the financiers
who are going to want to minimize the price.
MR. MCMAHON replied, "That is the making of a great
negotiation." But ExxonMobil as a producer wants to get the best
return for its investors, which is aligned with the State of
Alaska to have the best deposits into the Permanent Fund and
receive the best production tax payments as possible.
3:48:03 PM
SENATOR WIELECHOWSKI asked if ExxonMobil dropped the project
because it was no longer economically viable, if they were asked
by the governor, or some other reason.
MR. MCMAHON replied that this all developed last year when the
administration and AGDC were adamant about starting the front-
end engineering and design (FEED) phase in 2017, and ExxonMobil
felt the project was not ready. The cost of supply was not
competitive with the global LNG market and commercial
arrangements were not in place to govern a FEED venture, nor
were the necessary fiscal terms in place to give them confidence
to commit the $1 - $1.5 billion that FEED would cost. In the
discussions around that situation, one option was to remain in
the pre-FEED phase and continue working on these items, and
ExxonMobil indicated a willingness to work on the regulatory
permits at that time to further de-risk the project while the
other matters were addressed. Another alternative was the state
taking over the project, so it could go into FEED on its
timeframe. So, when the administration made that decision for
the later, that is when the extensive handover and transition
process was started.
SENATOR WIELECHOWSKI asked his sense of the economic viability
of the project with the state doing it on its own.
MR. MCMAHON answered that they are encouraged about two things
on a state LNG project: the prospect of tax exemptions to reduce
the cost of supply that is not available to the AKLNG Project
and the possibility of getting low-cost financing. ExxonMobil is
also cognizant that a government project can address the
regulatory risk through government-to-government cooperation.
3:51:13 PM
CHAIR GIESSEL followed up on Senator Meyer's question about
consumers wanting the lowest possible price and companies
wanting the highest price for their gas (and so will Alaska),
saying in August, Wood Mackenzie found that this is one of the
more challenged projects in the whole world. They said if the
state gave up all its taxing authority that would help bring it
more into a realm of being competitive, and she asked in his
experience with global LNG if he had ever seen a government
entity give up its taxing authority to make a project go
forward.
MR. MCMAHON answered that he is aware of situations where host
governments have adjusted their take, or tax, on a project.
3:52:55 PM
DAMIAN BILBAO, Vice President, Commercial Adventures, BP Alaska,
said he fell in love with Alaska when he first arrived about 10
years ago. He recognized the great work that was done by the
joint project team and the AKLNG Project Manager Steve Butt to
deliver the pre-FEED JVA deliverables, work that was completed
on time and on budget.
His responsibilities at BP include Alaska LNG, their North Slope
fields operated by other companies, and their interest in the
TransAlaska pipeline (TAPS). He recognized that along with the
Prudhoe Bay field, TAPS is celebrating a 40-year anniversary in
2017. This past December 18, however, Alaska celebrated the 45th
anniversary of the signing of the Alaska Native Claims
Settlement Act (ANCSA), and without the support of Native
communities the state would have a much different history.
He asked that they remember that this state has the luxury of
discussing an Alaska LNG project only because of the cooperation
shown in establishing ANCSA. Ensuring another 40 years of
economic security for Alaska will require collaboration to find
common ground. For this reason and the fact of BP's
participation in that opportunity, BP continues to support an
Alaska LNG project led by the State of Alaska.
MR. BILBAO said that BP's support derives from three important
beliefs: first, the resource opportunity in Alaska is strong,
the talent is deep, and there is a history of coming together to
solve big problems. Secondly, the demand for LNG will continue
to grow in northeast Asia beyond 2025, and much of that growth
will come from players like China. Third, Alaska LNG can compete
for the growing demand as was shown in the Wood Mackenzie study
that Chair Giessel mentioned. However, certain nontechnical
solutions are required for that to be achieved.
The state is positioned to lead this commercial effort in three
focus areas:
1. The competitiveness of a tolling model where gas owners pay a
utility-like company to transport their gas to the Cook Inlet,
liquefy the gas and load it onto ships.
2. To preserve the federal regulatory schedule, because failure
to do so could add years to the overall venture project schedule
and impact the reputation of the project.
3. To identify options to fund both the next phase of the
project, the FEED, as well as the most financially demanding
phase, the construction, which would occur after the final
investment decision (FID).
MR. BILBAO said BP does not believe these three areas will
require contracting with large companies to begin the process of
purchasing pipe or steel, but rather will require a deep
analysis by subject matter experts familiar with commercial
aspects of the LNG business.
While BP supports a state-led project, they believe it is also
important for BP to do more than sit back and wait for AGDC to
answer these questions. "BP must actively support AGDC," he
said, and in doing that, AGDC and BP have signed a cooperation
agreement that would bring their efforts and resources together
on the three focus areas:
1. Assessing a tolling model,
2. Preserving the regulatory progress, and
3. Identifying financing options for the path forward.
MR. BILBAO said BP is committing people and funding to this
joint effort although it will be an effort led by a much smaller
group of people than completed the pre-FEED deliverables, which
Mr. McMahon just summarized.
MR. BILBAO said that BP appreciates AGDC's commitment to working
together and looks forward to updating the legislature over the
course of the year. He added that this is an important year for
BP in Alaska and they look forward to celebrating the
anniversary of Prudhoe Bay and TAPS first 40th anniversary.
While BP has worked with its co-owners to produce over 12
billion barrels of oil from Prudhoe Bay, there are still
billions more to produce at Prudhoe Bay and across the North
Slope.
MR. BILBAO concluded that as the governor's chief advisor on oil
and gas, John Hendrix, said during his recent speech at "Meet
Alaska" on January 13: "We must all pursue our future as one
Alaska." BP agrees. It is only as one Alaska that the state will
continue to solve big problems. BP looks forward to continuing
to work with this legislature, the administration, Alaska's
Native corporations and communities, their contractors and
upstream co-venturers in support of a one Alaska future.
3:58:27 PM
CHAIR GIESSEL noted a copy of the agreement in their packet and
online.
4:00:16 PM
CHAIR GIESSEL thanked BP for recognizing that AGDC could use
some help, as the legislature had expressed concern over the
question of expertise in the past. She also appreciates their
emphasis on communication with the legislature as well as the
growth beyond 2025, because legislative consultants have said
there actually is no window to race for. Would he agree?
MR. BILBAO answered that he appreciates the kind words and they
hope the agreement will lead to some productive efforts in a
transparent process as well as some clear deliverables over the
course of the year. He is not a forecaster, but it is important
to be cautious in chasing a window. He believes very smart
people have come up with different forecasts, and rather than
debate which is the right one, he believes the first next steps
are finding what it will take to deliver a competitive project
and how it would be financed, and making sure the regulatory
issues stay on track while those questions are answered. If
those two first questions are answered, then they will know
whether the project will be competitive in the market and how
robust their offer will be to the market, and it is important to
address those questions in that sequence.
CHAIR GIESSEL asked how he views the tolling model working.
Simply put, BP and its fellow companies on the North Slope agree
to put the gas into the pipeline that the State of Alaska is
working on building. Then it comes down to the LNG plant in
Nikiski at the other end, and it sounds like the companies would
then repossess the gas to sell as LNG.
4:03:42 PM
MR. BILBAO answered that there are a lot of different versions
of commercial structures and how the risk and value is
distributed.
In a traditional tolling model, the gas owner would pay a third
party that owns the system a toll (fee) to move their gas
through the pipe to liquefy it. They would either take
possession themselves to market it or the buyer themselves may
take the LNG at the facility and transport it. It's very much
the nature of the relationship between the gas resource owner
and the facility owner.
In an integrated model like the one that AKLNG had been working
on up until the end of 2016, the resource owners would also own
the facilities and move BP's share of gas through its share of
the facilities. In a tolling model, a third party owns the
facilities and one is paying them to move it through their
facilities as opposed to one's own. So, the key difference
between the tolling model and the integrated model is who is
owning the facility through which the gas is flowing.
There are also different versions of a tolling model where
another third party could be the one buying the gas and paying
the toll to move it through the system.
CHAIR GIESSEL asked how many people will be committed to the
work in the agreement.
MR. BILBAO answered they still need to sit down with AGDC and
get more specific about the deliverables, the timelines, and the
type of benchmarks he expects the legislature to ultimately want
to see to measure the progress of a project. For the time being,
he suggested the workforce is a fraction of the one that worked
on the joint venture deliverables, in terms of both people and
funding. This is because the technical product that the JV team
delivered is very much boots-on-the-ground data collection, a
more labor-intensive effort. Whereas he is talking about a
nontechnical, commercially-focused, subject-matter-expert-driven
effort. So, BP might leverage more internal resources and there
may be an appropriate role for a financial advisor - a big bank
perhaps - but it will look and feel different in terms of focus
as well as scope versus the pre-FEED deliverables.
4:06:35 PM
DARREN MEZNARICH, Manager, North Slope Gas, ConocoPhillips
Alaska, said he would be brief and build upon his colleague's
previous comments, and that ConocoPhillips supports state
efforts to try and move a project forward. They support a state-
led project, because there are certain things only the state can
do, which will make an Alaska North Slope (ANS) gas project more
competitive and lower its cost of supply. AGDC has discussed
these as key elements in their plan, first structuring for
federal and state tax efficiencies including seeking federal
tax-exempt status. This could be a significant opportunity and
they support AGDC pursuing this, as well as advancing low-cost
financing and investor options. These key elements could be
foundational to a competitive project even in this price
environment, and they could also provide a compelling story to
LNG buyers, project lenders, and investors.
MR. MEZNARICH reiterated that ConocoPhillips intends to make its
gas available to a state-led project on mutually-agreed,
commercially reasonable terms.
4:08:19 PM
CHAIR GIESSEL thanked him and, finding no questions, invited the
AGDC's representatives, Frank Richards and Lieza Wilcox, to
testify.
KEITH MEYER, President, Alaska Gasline Development Corporation
(AGDC), apologized for not being with the committee today. He
added that he would not be listening to the meeting as he had an
appointment with a potential large customer. He said that Mr.
Richards and Ms. Wilcox had put together a very good
presentation.
CHAIR GIESSEL said there is still the burning question of how
one can meet with a customer when the project is still as
elusive as it is, and she thanked him for joining the committee
from Tokyo.
4:10:52 PM
FRANK RICHARDS, Senior Vice President, Program Management,
Alaska Gasline Development Corporation (AGDC), said he would be
presenting the project update as required under Section 77 of SB
138. This was done previously by the lead party represented by
Mr. Steve Butt, but it is his honor to present to them today
from AGDC's perspective. Ms. Wilcox would present on the
commercial and financial aspects of the project moving forward,
and MS. Rosetta Alcantra, Vice President, Communications was
also in the room, along with Mr. Gene Therriault, who is working
with AGDC in addition to his role with AIDEA, and will be
representing AGDC as a boots-on-the-ground contact able to
interface directly with legislators to make sure their questions
are answered. Representatives from the Department of Natural
Resources (DNR), Department of Revenue (DOR), and possibly the
Department of Law (DOL) were on line.
CHAIR GIESSEL recognized Department of Labor and Workforce
Development (DOLWD) Commissioner Heidi Drygas, who serves as a
board member of AGDC, in the audience.
4:12:58 PM
MR. RICHARDS began with a background of AGDC's responsibilities
that were provided in its enabling legislation and said he would
talk about the board of directors and the roles they are playing
in providing directions as the project advances, and then he
would give the Section 77 update for the AKLNG project. He would
also provide some updates on the commercial and financial
aspects of AGDC's role in moving this project forward to a
successful conclusion.
CHAIR GIESSEL said she appreciated his nice outline, but the
committee had already reviewed some slides and suggested that he
skip those.
MR. RICHARDS agreed and breezed through the slide of the board
of directors, seven of whom the legislature had confirmed and
said that more nominees would come before them for confirmation.
CHAIR GIESSEL pointed out that only one original person was left
on the board after its three-year existence.
4:16:12 PM
MR. RICHARDS said many know the components of the AKLNG project
are a gas treatment plant (GTP), which takes gas from both
Prudhoe Bay and Point Thomson (through a connecting pipeline),
and turns the gas into an LNG-quality specification - removing
the carbon dioxide and hydrogen sulphide - that would then pass
down the 800-mile pipeline over three mountain ranges, through
eight compression stations, delivering it to the south side of
Cook Inlet where the gas is liquefied (refrigerated and
compressed down to 1/600th of its original size and volume),
making it available to the market through shipments. Those
plants are designed to handle up to 20 million metric tons per
year.
4:17:00 PM
CHAIR GIESSEL asked if AGDC is proceeding with purchasing the
existing ConocoPhillips LNG export facility in Nikiski.
MR. RICHARDS prefaced that he was not aware of any
confidentiality agreements they had signed with ConocoPhillips
on the subject and that Mr. Krusen could better answer that
question.
4:17:54 PM
FRITZ KRUSEN, Vice President of Alaska LNG, Alaska Gasline
Development Corporation (AGDC), Anchorage, Alaska, answered that
acquisition is a "touchy subject," but there are a lot of ways
the ConocoPhillips plant would help the AKLNG mission: it would
give the project more waterfront property and give it immediate
standing with FERC and with buyers. There is a lot of ways that
plant would fit into an Alaska LNG project. It also allows an
early production scenario that accelerates revenues.
CHAIR GIESSEL asked what cost would hypothetically be required
to renovate that facility if it were purchased.
MR. KRUSEN replied that it needs to be developed by whomever
places a bid on the project. He couldn't provide such an
estimate.
SENATOR MEYER asked if an export license is part of the sale.
4:19:47 PM
MR. KRUSEN said he assumed so.
SENATOR STEDMAN asked how the plant intersects with the 600-acre
site that has already been purchased by the project and how they
are interrelated. Are they mutually exclusive or inclusive?
MR. KRUSEN answered that they are very close to each other, but
not exactly contiguous. The ConocoPhillips Kenai LNG site is
more to the north than the existing AKLNG lands.
SENATOR STEDMAN asked the scope of the acreage.
MR. KRUSEN answered that the ConocoPhillips site is about 200
acres as opposed to 600 acres owned by the AKLNG project.
4:21:29 PM
SENATOR WIELECHOWSKI asked if AGDC were to acquire the Nikiski
plant, would the idea be to expand it or build a separate plant.
MR. KRUSEN answered that the AKLNG Project has been tasked with
advancing a 3-train, 20-million ton per annum (MTPA) project
that MR. Richards would be describing. The ConocoPhillips plant
is a solid, historic, 1.5 MTPA plant, which is also a good thing
although it is quite a bit smaller. So, between having the
smaller reliable plant that could be an early production method
for the large project, and having the large 20-MTPA, 3-trains,
there are all sorts of combinations and permutations making
anything is possible.
SENATOR WIELECHOWSKI asked how far down the road the discussion
is.
MR. KRUSEN replied that answer would be going too far.
CHAIR GIESSEL commented that she monitors the AGDC board
meetings, and the January 12 meeting had 10 minutes of open
discussion and then several hours of closed discussion. One of
the subjects that was cited as they went into executive session
was infrastructure acquisition and that is why she asked the
question.
4:24:04 PM
MR. RICHARDS said at the conclusion of the JVA with their former
partners there was a period of transitioning technical and
environmental data. The pre-FEED JVA represented nearly $500
million of investment for design, environmental work, safety and
reliability studies to be able to advance this project. All that
material was provided to the co-venture parties. Those 77
deliverables and the literally thousands of work product studies
that were developed in advance of the project were provided in
very detailed one-on-one discussions with subject matter experts
sitting on both sides of the table, so there could be clearer
insight into the work that was developed.
For the FERC filing they had very extensive meetings with their
licensing team who had been working directly with FERC and the
regulatory agencies in developing the resource reports that had
been submitted to FERC. They were given updates on where those
reports were along with the comments that had been made to the
regulatory agencies, so that as AGDC advances the project they
understand where the agencies were coming from and what
commitments or discussions had been held. That gave AGDC a push
start to be able to take on those responsibilities; in this
case, the primary focus in 2017 is going to be the FERC filing.
The three-legged stool they want to advance is commercial,
financial, and regulatory to de-risk the project.
MR. RICHARDS said the key to this is that AGDC is now the
repository of this information for the State of Alaska. It now
has all the AKLNG work product, the work developed under the
ASAP, and the work product that was developed and paid for
through TransCanada on the Alaska Pipeline Project. They now
have a very large repository of information that can be used
without any restrictions.
CHAIR GIESSEL asked if the term Alaska LNG is available to AGDC
moving forward.
MR. RICHARDS answered yes. In statute and in SB 138 it is called
"an" Alaska Liquefied Natural Gas Project; only the colors and
fonts used in the description are trademarked. So "Alaska LNG
Project" can still be used to advance the project.
4:27:24 PM
CHAIR GIESSEL asked what he means when he says Alaska now has
unrestricted rights to all that data and asked if the companies
still retain that right also.
4:27:45 PM
LEIZA WILCOX, Vice President, Alaska Gasline Development
Corporation (AGDC), replied that is true. The agreements that
were concluded gave all the participants in the pre-FEED JVA the
same rights to use the data. And a letter withdrawing the other
participants from the docket went to FERC leaving AGDC as the
only party on it.
4:28:13 PM
SENATOR MEYER asked if the state had applied for an export
license yet.
MR. RICHARDS replied that AKLNG LLC had applied and received an
export license.
SENATOR MEYER asked who owns it: the state or the partners.
MR. RICHARDS replied that it belongs to the producer partners -
BP, ConocoPhillips, and ExxonMobil. That is part of the
discussion in terms of the land access and land option rights
that Ms. Wilcox will be describing.
4:28:59 PM
He said that slide 8 identifies priorities for advancing the
project: the cost of supply, filing the FERC Section 3
application, which then initiates the environmental process (led
by FERC), and talking to potential customers and potential
financial partners. The State of Alaska is not taking on this
project alone and will not cover all the costs alone either.
4:29:58 PM
CHAIR GIESSEL said a year ago the board presented the first
update and a RACI chart of responsibilities - who was 1)
responsible for a duty, 2) accountable for a decision, 3) who
was consulted, 4) who was informed. It was very clear the
Department of Natural Resources (DNR) would be responsible for
marketing and she asked where that stands now.
MR. RICHARDS answered that DNR is actively engaged with AGDC and
has been participating in engagements specifically on the last
several trips to Asia with the Governor and President Meyer.
When they talk about engaging customers, they feel it is AGDC's
responsibility to market the project, not the molecules, and let
customers know Alaska is in the marketplace to meet their needs
in the future. The feedback they received on some of those trips
was that folks weren't aware that the AKLNG Project was
proceeding forward. They, therefore, felt that engaging the
potential customers was necessary to identify what the project
is, what the potential cost might be, and to essentially say
that Alaska is ready to meet those market demands.
CHAIR GIESSEL asked how one engages customers without talking
about price and if that isn't marketing gas.
MR. RICHARDS answered when they talk about the cost of the
project, they refer to the updated estimate given to them at the
conclusion of the JVA, previously envisioned as $45-65 billion.
Luckily through the work they did, the cost estimate is at the
low end of that range. When they talk in concept they are
talking about the cost of the project understanding that
additional work is needed to reduce further the cost of supply
for the state as opposed to a 12-14 percent rate of return that
the producer companies need. Slides further on in the
presentation modeled what the tolls would be and that is what is
being discussed with the market.
4:33:41 PM
MS. WILCOX added that "customers" means different things to
different sellers. For an infrastructure project, customers are
the tollers. So, to the extent that AGDC has been charged in
developing a financeable project that is there is their primary
focus and the preferred option: to find the tollers that would
reserve capacity on the line that would make it financeable at a
low cost. Those potential customers come from the North Slope
and maybe from other places to the extent that the resource
owners do not take a tolling position on the project. So, they
would prefer to develop all of it in sequence. Part of the issue
is that so many pieces of the puzzle need to come together at
the same time.
CHAIR GIESSEL asked if she is suggesting that the people who
would ultimately be buying the gas would buy it at the wellhead
from the producers.
MS. WILCOX answered yes. That is the case in many projects.
CHAIR GIESSEL remarked that what strikes her is that it has
always been emphasized to them that the money is not in the toll
of a pipeline; it's in the LNG that is sold at the other end.
This is a concern that comes to her mind as the committee acts
to guard the best interests of the people they represent and
about a third of the population of the state is represented at
this table.
4:36:08 PM
STEVE WRIGHT, Upstream Project Manager for AKLNG, Department of
Natural Resources (DNR), said he had been a member of the state
gas team for about two and half years as a contractor. DNR
Commissioner, Andy Mack, has asked him to reinforce the message
that the state clearly retains authority and responsibility for
marketing the state's RIK and TAG gas volumes. It is clearly
spelled out in SB 138, and the department has a clear
understanding that those roles and responsibilities are vested
in it.
CHAIR GIESSEL said that was very reassuring. She asked if the
commissioner had made the RIK decision.
MR. WRIGHT answered no and explained that he referenced RIK
because if there is an RIV decision, then there will be no
molecules for the department to monetize or market, and they are
very far removed from an RIK decision point at this point. The
department needs to understand the full commercial structure of
the project - the financing and allocation of the risk and value
- before it can go into a formal RIK decision process.
CHAIR GIESSEL said she appreciated that, but reminded him that
most of them have sat through this process for multiple years
and understand that unless the state takes those molecules in
kind - own some gas molecules to sell ourselves - this project
doesn't really benefit the state to a significant level.
SENATOR MEYER asked if AGDC's has a projected budget through
calendar year 2017.
MR. RICHARDS answered not yet, but it is their responsibility to
present to the board for their authorization those expenditures
out of the two funds that AGDC has been authorized. It's their
goal to present the 2017 outlook to the board at the February
meeting. The only thing in it is the authorization for the
operating budget which includes salaries, rent, lights, and
travel costs for AGDC personnel. When the board authorizes the
2017 budget, he would be glad to provide it to the legislature.
SENATOR MEYER asked how much money AGDC has now.
MR. RICHARDS replied that the legislature capitalized two
different funds for AGDC: the first one was the In-state Natural
Gas Pipeline Fund, which was used for developing and advancing
the state-owned, in-state project. The second fund was developed
for the Alaska LNG Project that was to pay the cost of buying
out TransCanada and cover the cash needs through 2016. The
combined balance of both funds is approximately $104 million.
SENATOR MEYER asked if there is a problem with co-mingling those
funds.
MR. RICHARDS replied that they aren't being co-mingled; they are
separate and distinct. The Instate Natural Gas Pipeline Fund is
being used solely to advance the ASAP Project, and for this year
that consists of just doing work on the Supplemental
Environmental Impact Statement (SEIS). The AKLNG Project Fund is
being used to advance the FERC regulatory work. The only place
where the funds come together is in the operational budget for
AGDC. A cost allocation plan was developed and approved by the
board that identifies a portion would come from the Instate Fund
and a portion will come from the AKLNG Fund.
4:41:27 PM
CHAIR GIESSEL said Mr. Richards mentioned that there is a
balance of $104 million in both accounts together and on
November 29, 2016, it was $109 million. So, it sounds like $5
million had been spent in the last five months. Where was that
spent?
MR. RICHARDS explained that a large portion of the spending in
2016 was to cover the cash calls for the AKLNG Project and that
cash calls are still coming in to cover expenses of the project
management team and all their contractors; a windup cost is also
represented. The other portion of the fund is being used to
cover AGDC salaries with a small portion being used to advance
the ASAP Project.
4:43:39 PM
CHAIR GIESSEL noted a picture of a Houston Office with five
staff members and asked the cost of that office and staff per
month.
4:44:05 PM
MR. KRUSEN answered that the Houston office costs $10,000/mo.
They took over the sublease of a fourth floor Remington office
in the ExxonMobil complex, so their rate is being paid up until
the end of July 2017 after which it will go down to $7,000/mo.
Add utilities of $5,000/mo. to that. So, calendar year 2017 will
run $160,000 in round numbers.
CHAIR GIESSEL asked about the five professionals and their
support staff.
MR. KRUSEN answered that the five professionals are there, but
only one of them is full time; all the others are part time, and
they are shopping for an office administrator. He would figure
out their rates and give them that figure later in the
presentation.
4:47:08 PM
SENATOR HUGHES referring to slide 8 asked how much more state
funding was needed to get to the 2023/25 target date. She also
wanted to know if the state would recoup any of the long-term
financing.
MS. WILCOX answered in the previous project structure the state
had to produce a quarter of the $45-65 billion project estimate.
It was in the process of developing a financing plan and didn't
know where all the cash would come from. Similarly, with this
project, with just one party they don't have all the answers yet
about how much cash will be required and how much of it would be
borrowed and under what terms. They do know that for this
project to work - to become competitive - it needs to be project
financed and to have the advantages of low cost financing.
"Unless it has that, it would not be competitive." The majority
of it would have to be financed and backed by those tolling
agreements by customers either from the upstream, downstream, or
otherwise that would secure the debt.
SENATOR HUGHES asked while the state is facing fiscal pressures
over the next couple of fiscal years what kind of budget is AGDC
looking at for FY18/19/20 to keep this moving forward.
MS. WILCOX answered that until they reach tangible commercial
milestones on this project, AGDC will keep the legislature
informed on the progress and take it one step at a time.
SENATOR HUGHES said she gets that, but she also wants some
numbers to give her some background for the budget spreadsheet.
4:51:04 PM
MR. RICHARDS replied that the project pace is going to be
determined by getting a contract with a finance partner that is
willing to help front the bill. It is hard to say what the exact
cost will be. If they are going to meet the market in the
service window they are talking about, they will be entering the
next FEED and execution. This year they are working on the
regulatory work and next year they will be advancing the
engineering to be able to go into execution.
The FEED estimate ranges from $1-$1.5 billion, but that hasn't
been identified as the amount they would ask the state for. They
need to find partners and see what they are willing to bear in
advancing this project.
4:52:28 PM
MR. RICHARDS briefly reviewed the FERC process. He said FERC has
the responsibility of essentially citing and permitting the
liquefied natural gas terminals in the U.S. The benefit of FERC
is that they come with a very comprehensive citing process that
follows a very standard process, which means when they accept an
application it goes into the Environmental Impact Statement
(EIS) that is very prescribed over an 18-month period, leading
to a final EIS usually six months later. That's 24 months from
initiation of an EIS to conclusion. Very few transportation
projects in the state ever receive an EIS at that record pace.
The prefile process AGDC is in right now is really gathering the
information to make sure the environment, safety, and regulatory
aspects are addressed acceptably for FERC to receive the
application. The 13 resource reports cover the flora, fauna,
safety, viability, and engineering of the project.
LNG plant citing is what FERC Section 3 is about: sponsors of
the project petition FERC to say they have an integrated project
- the LNG plant, the upstream pipeline, the gas treatment plant,
and associated pipelines to be considered as an integrated
project. This is what AGDC is proceeding with.
He explained that the 33,000 page-Resource Report document has
gone through two iterations: the first draft and now the second
draft. Approximately 2,943 comments have come back; some of
which are being adjudicated. Many of them are editorial comments
and some will require additional work on the pre-FEED analysis
to be able to clarify. Some of the comments are asking for FEED-
level information and those can be pushed off until FEED is
initiated. The resulting list will be adjudicated with FERC and
its third-party contractor, which AGDC will now fund to be able
to advance the EIS. AGDC is the sole applicant and the partners
have identified this as a sole application to be the Alaska LNG
Project. The name stays the same, but the AGDC now is the sole
applicant.
4:55:44 PM
Slide 13 represented what is necessary for fulfilling an
application, Mr. Richards said. There will be nine separate
exhibits, one of which will be the resource reports. Their
target schedule for completing the application - one that will
be deemed by the FERC as meeting all their requirements - is
June 2017. It's a little bit later than envisioned, but they
didn't get the final comments until January. Those will be
adjudicated with in-house resources as well as external ones.
He elaborated that AGDC is a very small organization that
provides an owner's oversight, but relies on a lead contractor
to be able to advance its work. They are given a specific work
scope and when it is done they move off contract.
4:57:55 PM
The initial approach for the work will be the FERC Natural Gas
Agreement (NGA) Section 3 application, but also looking to
reduce the cost of the project (through rate of return and/or
federal taxation exemption).
CHAIR GIESSEL referred to report 7 dealing with community
impacts and asked if it is clear that the state is considering
relinquishing the taxation potential and payment in lieu of
taxes (PILT) to the communities in this project.
MR. RICHARDS corrected her that she was referring to report 5
and said the tax exemption is a federal benefit and the in-state
needs for communities still needs to be negotiated with the
communities and the Municipal Advisory Gas Project Review Board
(MAGPR) that the legislature set up. He believes they have said
they are not going to pay a C-PILT to the communities.
CHAIR GIESSEL said that question was asked of Wood Mackenzie in
August, and their interpretation was the state would be
relinquishing all taxing authority to make the project lower
cost.
4:59:35 PM
MS. WILCOX responded that the reason Wood Mackenzie represented
a no-tax alternative in its study was to show that even with all
taxes removed the project still had marginal economics. It was
not to suggest that all taxes should be removed. That slide is
trying to say that there is a lot more compelling step that
makes a much bigger difference than the taxes do: between the
chart that represents an equity findings project and a project
financed with utility returns.
5:00:37 PM
MR. RICHARDS said in summation (slide 16) this project has great
value to Alaska in terms of monetizing stranded resources and
providing gas to Alaskans. It will generate thousands of jobs
and enhance exploration and production across the North Slope
and Alaska.
The value of strategic advantage that Alaska has is the
proximity to the market - 7 to 9 days by ship to the Asian
market - and ConocoPhillips plant has been providing resources
to Asian for over 40 years. The North Slope has a proven
conventional resource and Alaska provides political stability as
a sovereign. There is another slight advantage for production
due to cold temperatures in Nikiski.
5:01:41 PM
MS. WILCOX continued the presentation on slide 19. She said she
had been with AGDC since 2011 and had presented part of ASAP's
project plan to a joint Resources Committee. Prior to that she
worked for 12 years for BP Alaska and before that she went UAF.
So, she has been in Alaska for over 20 years working in the oil
and gas industry.
She said slide 19 set the stage for the global LNG market using
a timeline and a Wood Mackenzie forecast for the Asian LNG
supply/demand balance. It is from Wood Mackenzie's projected
demand for LNG in Asian and the dropping off contracted demand.
Some of the projects may be re-contracting to extend long term
contracts and the drop-off represents the contracts that are
going off-line. The window will shift over time and one of the
challenges the Alaska project has is just the sheer length of
time it takes to develop it. One of the challenges they
collectively have to overcome is to build something that has
enough certainty in it early enough that the project can fit
into whatever demand window there is and hopefully be one of the
first foundations in it rather than the last chasing it. That is
part of the urgency that AGDC leadership is trying to instill.
5:04:48 PM
Slide 20 illustrated global demand for LNG by country, an
internal AGDC forecast. Like any forecast it shifts over time
and is never completely correct. It comes from one of the part-
time contractors seen on the Houston slide. She explained that
the bars represent every importer of LNG. However, the most
prominent ones are China, where a lot of growth is expected over
the next decade. India has the same story. Japan is still the
highest importer and is expected to remain the highest importer
of gas by far, although the absolute number varies depending on
how much switching between nuclear and gas Japan will ultimately
do. This is why AGDC has an office in Japan. It's not only the
largest consumer of LNG, but it also has the most variety of
potential customers and the most sophisticated industry
developed around it. That is why Japan, in AGDC's view, requires
a particular presence.
CHAIR GIESSEL commented that Reuters pointed out today that
Japan is trying to sell extra supply now.
MS. WILCOX said that is correct and the previous slide showed
the current over-supply from other projects that have come on
line. But the demand line has shifted down slightly and now the
buyers that have contracted for that demand are trying to sell
the cargos.
5:07:16 PM
SENATOR VON IMHOF asked for a map of the potential projects that
may be coming on line in the next four of five years and what
their costs are compared to ours.
MS. WILCOX replied that she could do that, yes.
SENATOR HUGHES asked if AGDC is monitoring those other projects
that will also hit that window.
MS. WILCOX answered that part of the expertise AGDC has brought
on board is John Hattenburger, who provided this forecast. She
added that he is among some people who have been in the industry
for almost 40 years and have a very good sense of what is going
on. It's not a formal process, because they haven't been at it
that long and things don't change that quickly, but one of the
things does is a weekly LNG update where they pull together
different sources of news and send it out to several parties in
the State of Alaska.
5:09:20 PM
SENATOR HUGHES said it is an important analysis and needs to be
figured into the equation of whether or not to move forward.
MS. WILCOX said many parties do that work and they try not to
spend money to do something from scratch by subscribing to
services that forecast pricing and things like that.
5:09:59 PM
MS. WILCOX said slide 21 is the core of the objective of what
her organization will be doing this year in cooperation with BP
and with others: that is focusing on reducing the cost of supply
for the project.
5:10:32 PM
She said this Wood Mackenzie chart represents cost of supply as
a combination of upstream, midstream, and shipping (looking at
it as an integrated investment) using their estimates. The
project estimate is the biggest part of the bar at $45-$64
billion. They evaluated what the project structure as it was
would deliver and then presented the opportunities. The first
structures a project as a third-party tolling utility (getting
commitments from customers to ship their gas) and the last
scenario was the same thing but with the removal of taxes. The
thinking behind this graph was to show that the project is still
was not quite competitive at the current price level, which is
quite low. So, the step between the first bar and the second bar
is really what the focus of the commercial and financing work
will be on this year.
CHAIR GIESSEL asked Ms. Wilcox if the no tax scenario refers
only to federal tax.
MS. WILCOX responded no; she believed that it also excluded
production taxes, state income taxes, and possibly PILT. It did
not remove royalty, because this is an integrated project and
part of that would be royalty gas.
5:13:02 PM
CHAIR GIESSEL said when she talked to Mr. Barrowman, the Wood
Mackenzie employee who did the study, he said he hadn't
considered PILT at all. She asked if it would be logical to say
this is a competitive project if oil was at $70/barrel, but that
Lower 48 shale gas could come on line at that price, too, thus
making Alaska, perhaps, still the most challenged project in the
world.
5:13:54 PM
MS. WILCOX said that is a macro-economic question that she is
not ready to take on in this hearing. She knows a lot of factors
go into the volatility of the Lower 48 Henry Hub and it's not
all oil based. She has seen EIA forecasts that suggest that at
high oil prices the cost of Henry Hub would high as well. So,
the Lower 48 projects that rely on Henry Hub as their pricing
mechanism would also be expensive.
CHAIR GIESSEL added that the Lower 48 states have a much lower
cost of production.
5:14:53 PM
SENATOR MEYER said it seems like Alaska is "hanging our hat" a
lot on the tax-exempt status and asked if there is a ruling from
the IRS on that.
MS. WILCOX answered no, but they have received some advice and
are working on a preliminary letter with a firm called Nixon
Peabody. The point of the slide, however, is that they are
trying to not "hang our hat" too much on the tax-exempt status,
but rather on the third-party owned tolling utility structure,
because that is where most of the savings are. However, they
still plan to pursue the tax-exempt status.
SENATOR MEYER remarked that one of her bullet points says tax
exempt state ownership reduces cost of supply even further.
MS. WILCOX responded that is true.
CHAIR GIESSEL added that the committee had two law firms opine
at the August update about the likelihood of that kind of
private letter ruling from the IRS and both were not promising.
5:16:34 PM
MS. WILCOX said one of AGDC's objectives is structuring for
third party financing as part of the work through the
cooperation agreement with BP (slide 22) and ultimately securing
long-term customer commitments. Not all those things can be done
extremely quickly, but as projects frequently do, they are done
in stages. So, there may be conditional commitments prior to
firm commitments. Reaching some commercial milestones on
conditional commitments is what they are striving for in 2017.
SENATOR MEYER said their third objective is to have more
transparency with the legislature, which they would really
appreciate as they are ultimately asked for funding. He also
stated that the Senate had a bill last year that would allow one
member to be part of the AGDC board as an ex officio member and
the governor vetoed it. So, how will AGDC achieve more
transparency with the legislature, the public, and the market?
MR. RICHARDS answered that as sole advocate for the AKLNG
Project, AGDC recognizes they have the duty to present
information to the legislature twice a year. But they want to do
that better with more frequent communications, bi-monthly
possibly.
SENATOR MEYER said he looked forward to having that
transparency.
SENATOR HUGHES asked if the governor would still veto a similar
bill.
MR. RICHARDS said he didn't know.
5:19:51 PM
MS. WILCOX said slide 23 shows the primary focus for 2017:
commercial and financial work in terms of developing a financing
plan for the next stage of the project and some regulatory work.
She pointed out, in the spirit of transparency, the last bullet
on the commercial section, an Alaska LNG Summit that AGDC is
planning.
She explained that one of the things that is important in
attracting potential investors and customers is establishing
relationships with them and giving them a sense of where the
project is and what it is. As she started looking at books or
publications about LNG, she found that Alaska gets about two
paragraphs compared to other projects. Part of the issue the
state has, because this is such a long ranging and challenged
project, is that it hasn't been paid attention to in the market
very much. So, they would like to have some of the companies
they are talking to come up and take a tour of Nikiski and the
North Slope, and have some informative presentations. That event
is planned for March; they are in the process of sending
specific invitations. Part of the costs will be covered by those
attendees themselves, which does show commitment, and part of it
is being covered through sponsorships being raised from
potential contractors.
She said one of the things they want to showcase is the
engagement of the Native corporations and contractors in Alaska
- basically show off the industry bench strength in Alaska to
build a project.
CHAIR GIESSEL asked if this is similar to the 2012 Summit that
was held in Valdez by the Alaska Gasline Port Authority.
MS. WILCOX replied that she wasn't familiar with that event and
couldn't answer that question.
MS. WILCOX reiterated that AGDC's primary objective is to secure
tolling agreements that are sufficient to underpin project
financing and those agreements may come in stages. This is what
needs to happen prior to final investment decision (FID). The
tolling structure is very common in the gas pipeline industry
and is becoming more common in the LNG industry, as well. The
goals are to make financing cheaper and reduce the risk to the
owner.
Who could be the tollers (slide 25)? Ms. Wilcox said producers
essentially asked tollers for the model for the Alaska gasline
when it was not a LNG project and when it was a pipeline to the
Lower 48. It would be a similar structure except under a
different regulatory code. Merchant as toller would be someone
who buys gas at the North Slope and then sells it either in
Nikiski or somewhere further down the line. All of these parties
are possible as participants in the project. AGDC talked about
concluding an MOU with ConocoPhillips to develop a JV. There are
several steps in between, but if a marketing JV is developed, it
could be a merchant that purchases and sells gas. A third party
is a potential participant in this model: frequently customers
like to come up the value chain and bid to make sure they have
capacity. If the producers are not willing to be the tollers all
the way through for all the gas, then third parties need to be
brought in to provide that toller role and provide credit
support for the project.
CHAIR GIESSEL said establishing the AKLNG Project had hundreds
of hearings with the state as partner and their concern always
was that the state have a huge piece of cash prize at the end.
They were told throughout, that as a partner owning some of the
gas and marketing it was where the biggest prize was for Alaska,
which is their motivation. She is not seeing that opportunity as
strongly in these models, but they will see what AGDC comes up
with the help of BP.
MS. WILCOX said one of the things that has changed since 2012 is
the market when this project was discussed. As AGDC tries to
reduce cost of supply they are trying make it so that the
midstream is delivered as cheaply as possible, so the upstream
can realize the value for the state.
5:26:41 PM
CHAIR GIESSEL said the message she would convey is that while
the bill passed with wide margin, she wasn't sure there would
have been as much legislative support with this model.
5:27:10 PM
MS. WILCOX said slide 26 presents potential investors, but
there's not too much substance to it at the moment. The Houston-
based LNG team is very experienced, and the part-time
contractors' biographies were on slide 27.
CHAIR GIESSEL paused to ask Mr. Krusen the cost of the Houston
staff.
MR. KRUSEN said he didn't have a full picture, but about $1
million/year for five employees: one full time and everybody
else part time.
5:28:42 PM
MS. WILCOX said they will continue to communicate with the
legislature through the session with more information and more
of the specific numbers they are looking for in the budget
process. She hoped to convey that a state-led project has value
as the one party that bring others (market participants that
will ultimately make it work) together into a project.
5:29:37 PM
MR. RICHARDS concluded that AGDC is actively communicating with
the state agencies and working hand-in-hand with them on
advancing this effort.
5:31:07 PM
CHAIR GIESSEL adjourned the Senate Resources Committee meeting
at 5:31 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SRES-AGDC-AK LNG Update-1-23-17.pdf |
SRES 1/23/2017 3:30:00 PM |
AK LNG |
| SRES-enalytica-AK LNG Overview-2014-2016.pdf |
SRES 1/23/2017 3:30:00 PM |
AK LNG |
| SRES-BP-AGDC-Cooperation Agreeement-1-23-17.pdf |
SRES 1/23/2017 3:30:00 PM |
AK LNG |
| BP Legislative Testimony_Jan 2017_final.pdf |
SRES 1/23/2017 3:30:00 PM |
AK LNG |
| SRES Testimony 01-23-2017 -- Bill McMahon ExxonMobil.pdf |
SRES 1/23/2017 3:30:00 PM |
AK LNG |
| SRES-Testimony-01-23-2017-ConocoPhillips.pdf |
SRES 1/23/2017 3:30:00 PM |
AK LNG |