04/09/2013 03:30 PM Senate FINANCE

CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 4(FIN)                                                                           
                                                                                                                                
     "An  Act relating  to  the  Alaska Gasline  Development                                                                    
     Corporation;    establishing    the   Alaska    Gasline                                                                    
     Development  Corporation   as  an   independent  public                                                                    
     corporation of the state;  establishing and relating to                                                                    
     the in-state natural gas  pipeline fund; making certain                                                                    
     information  provided  to  or  by  the  Alaska  Gasline                                                                    
     Development  Corporation  and its  subsidiaries  exempt                                                                    
     from  inspection as  a public  record; relating  to the                                                                    
     Joint  In-State Gasline  Development Team;  relating to                                                                    
     the  Alaska Housing  Finance  Corporation; relating  to                                                                    
     judicial review  of a right-of-way  lease or  an action                                                                    
     or decision related to  the development or construction                                                                    
     of an  oil or gas  pipeline on state land;  relating to                                                                    
     the  lease  of  a   right-of-way  for  a  gas  pipeline                                                                    
     transportation  corridor, including  a  corridor for  a                                                                    
     natural  gas  pipeline  that  is  a  contract  carrier;                                                                    
     relating  to the  cost of  natural resources,  permits,                                                                    
     and leases  provided to the Alaska  Gasline Development                                                                    
     Corporation;  relating  to  procurement by  the  Alaska                                                                    
     Gasline  Development   Corporation;  relating   to  the                                                                    
     review  by  the  Regulatory  Commission  of  Alaska  of                                                                    
     natural gas  transportation contracts; relating  to the                                                                    
     regulation by  the Regulatory  Commission of  Alaska of                                                                    
     an in-state  natural gas pipeline project  developed by                                                                    
     the  Alaska Gasline  Development Corporation;  relating                                                                    
     to  the  regulation  by the  Regulatory  Commission  of                                                                    
     Alaska  of  an  in-state   natural  gas  pipeline  that                                                                    
     provides    transportation   by    contract   carriage;                                                                    
     repealing the  statutes relating to the  Alaska Natural                                                                    
     Gas   Development  Authority   and  making   conforming                                                                    
     changes; exempting  property of a project  developed by                                                                    
     the   Alaska  Gasline   Development  Corporation   from                                                                    
     property  taxes before  the commencement  of commercial                                                                    
     operations; and providing for an effective date."                                                                          
                                                                                                                                
3:41:34 PM                                                                                                                    
                                                                                                                                
WILLIAM  WALKER, ATTORNEY,  WALKER  RICHARDS LLC,  requested                                                                    
permission to speak to the  sponsor's response following the                                                                    
presentation.  He   noted  that  he  a   supported  pipeline                                                                    
project; however, he could not  support the project proposed                                                                    
in HB 4.                                                                                                                        
3:42:52 PM                                                                                                                    
                                                                                                                                
Mr.  Walker began  a presentation  titled  "City of  Valdez-                                                                    
Presentation  on  the In-State  Gas  Pipeline  Bill (HB  4)"                                                                    
(copy on file). He shared  that in crafting the presentation                                                                    
he had drawn upon his  knowledge of TAPS. He discussed Slide                                                                    
2, "Problems with HB 4 and AGDC Concept":                                                                                       
                                                                                                                                
     •Cheaper Alternatives Like LNG Import                                                                                      
     •Unclear Whether AGIA Violated by H.B. 4                                                                                   
     •Circumvents Existing Regulatory Structure                                                                                 
     •FERC open season regulations                                                                                              
     •RCA and not FERC regulated                                                                                                
     •No common carriage in-state                                                                                               
     •Just and reasonable rates not required                                                                                    
     •Expansion costs on new entrants                                                                                           
     •Cost Estimate Not Transparent                                                                                             
     •Wrong Project Scope                                                                                                       
     •State Loses if H.B. 4 Structure Used for Big Project                                                                      
                                                                                                                                
3:44:41 PM                                                                                                                    
                                                                                                                                
Mr.  Walker addressed  Slide 3,  "Background -  HB 369."  He                                                                    
related that HB 369 had been the predecessor to HB 4:                                                                           
                                                                                                                                
     •HB 369 Sec. 4.                                                                                                            
          AS 38.34.099 to read:                                                                                                 
          "(1)  'in-state  natural  gas  pipeline'  means  a                                                                    
          pipeline  for transporting  natural gas  that runs                                                                    
          from the North Slope to tidewater in the state"                                                                       
     •HB 369 Sec. 9.                                                                                                            
          Amended AS 41.41.990(3)to read:                                                                                       
          "'project'  means the  gas transmission  pipeline,                                                                    
          together   with    all   related    property   and                                                                    
          facilities,  to extend  from  the  North Slope  of                                                                    
          Alaska or other  regions of the state  to a market                                                                    
          in the state,  or be available to a  market in the                                                                    
          state,  and  to tidewater  at  a  point on  Prince                                                                    
          William   Sound  or   Cook  Inlet,   and  includes                                                                    
          planning,   design,   and  construction   of   the                                                                    
          pipeline  and   facilities  as  described   in  AS                                                                    
          41.41.010(a)(1)-(5)."                                                                                                 
                                                                                                                                
Mr. Walker  stated that a direction  of HB 369 had  been for                                                                    
the state to participate in  an export process; to encourage                                                                    
the application for a license,  or to encourage those with a                                                                    
license to get  an extension. He said that  with the passage                                                                    
of HB 369  it had been anticipated that a  large volume line                                                                    
would  be  built  that  could provide  for  all  of  Alaska.                                                                    
Additionally,  the bill  discussed adding  an export  piece,                                                                    
should  the increased  volume lower  the cost  of energy  to                                                                    
Alaskan consumers.                                                                                                              
                                                                                                                                
3:46:45 PM                                                                                                                    
                                                                                                                                
Mr. Walker spoke  to Slides 4 and 5,  "Potential Benefits to                                                                    
Alaskans  from   a  Large  Volume   State-Owned  Gasline/LNG                                                                    
Project by PDC  Harris Group LLC (November  3, 2011)," which                                                                    
highlighted the  cost of energy  to Alaskans outside  of the                                                                    
Rail belt:                                                                                                                      
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                                                                                
     vs