Legislature(2015 - 2016)BARNES 124
03/14/2015 01:00 PM House RESOURCES
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| Audio | Topic |
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| Start | |
| HB132 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 132 | TELECONFERENCED | |
| += | HB 105 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
March 14, 2015
1:31 p.m.
MEMBERS PRESENT
Representative Benjamin Nageak, Co-Chair
Representative David Talerico, Co-Chair
Representative Mike Hawker, Vice Chair
Representative Bob Herron
Representative Craig Johnson
Representative Kurt Olson
Representative Paul Seaton
Representative Andy Josephson
Representative Geran Tarr
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 132
"An Act relating to the support of the Alaska liquefied natural
gas project by the Alaska Gasline Development Corporation."
- MOVED CSHB 132(RES) OUT OF COMMITTEE
HOUSE BILL NO. 105
"An Act relating to the programs and bonds of the Alaska
Industrial Development and Export Authority; related to the
financing authorization through the Alaska Industrial
Development and Export Authority of a liquefied natural gas
production plant and natural gas energy projects and
distribution systems in the state; amending and repealing bond
authorizations granted to the Alaska Industrial Development and
Export Authority; and providing for an effective date."
- BILL HEARING CANCELED
PREVIOUS COMMITTEE ACTION
BILL: HB 132
SHORT TITLE: AGDC SUPPORT OF NATURAL GAS PROJECTS
SPONSOR(s): REPRESENTATIVE(s) CHENAULT
03/02/15 (H) READ THE FIRST TIME - REFERRALS
03/02/15 (H) RES, L&C
03/06/15 (H) RES AT 1:00 PM BARNES 124
03/06/15 (H) Heard & Held
03/06/15 (H) MINUTE(RES)
03/11/15 (H) RES AT 1:00 PM BARNES 124
03/11/15 (H) Heard & Held
03/11/15 (H) MINUTE(RES)
03/11/15 (H) RES AT 6:00 PM BARNES 124
03/11/15 (H) Heard & Held
03/11/15 (H) MINUTE(RES)
03/13/15 (H) RES AT 1:00 PM BARNES 124
03/13/15 (H) Scheduled but Not Heard
03/14/15 (H) RES AT 1:00 PM BARNES 124
WITNESS REGISTER
MERRICK PEIRCE
Fairbanks, Alaska
POSITION STATEMENT: Testified in opposition to HB 132.
HAROLD HEINZE
Anchorage, Alaska
POSITION STATEMENT: Suggested that HB 132 be amended.
CHARLES MCKEE
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 132.
RICK KOCH, City Manager
City of Kenai
Kenai, Alaska
POSITION STATEMENT: Testified in support of HB 132.
PAT PORTER, Mayor
City of Kenai
Kenai, Alaska
POSITION STATEMENT: Testified in support of HB 132.
BOYD ROCKY KNUDSEN
Nikiski, Alaska
POSITION STATEMENT: Testified in opposition to HB 132.
DAVID OTNESS
Cordova, Alaska
POSITION STATEMENT: Testified in opposition to HB 132.
GEORGE PIERCE
Kasilof, Alaska
POSITION STATEMENT: Testified in opposition to HB 132.
GEORGE SITER
Soldotna, Alaska
POSITION STATEMENT: Testified in opposition to HB 132.
RON HYDE
Kenai, Alaska
POSITION STATEMENT: Testified in relation to HB 132.
FELICIA KEITH-JONES
High Mark Distillery, Inc.
Sterling, Alaska
POSITION STATEMENT: Testified in relation to HB 132.
ACTION NARRATIVE
1:31:02 PM
CO-CHAIR BENJAMIN NAGEAK called the House Resources Standing
Committee meeting to order at 1:31 p.m. Representatives Seaton,
Johnson, Josephson, Herron, Talerico, and Nageak were present at
the call to order. Representatives Hawker, Olson, and Tarr
arrived as the meeting was in progress.
HB 132-AGDC SUPPORT OF NATURAL GAS PROJECTS
1:31:46 PM
CO-CHAIR NAGEAK announced that the only order of business is
HOUSE BILL NO. 132, "An Act relating to the support of the
Alaska liquefied natural gas project by the Alaska Gasline
Development Corporation." [Before the committee was the
proposed committee substitute (CS), labeled 29-LS0623\P, Nauman,
3/11/15, adopted as the working document on March 11, 2015.]
1:31:55 PM
CO-CHAIR NAGEAK opened public testimony on HB 132.
1:32:58 PM
MERRICK PEIRCE testified in opposition to HB 132. To illustrate
a point related to competition he posed a scenario in which the
chief executive officer (CEO) of Home Depot concedes to Lowe's
the authority to determine when, where, and if Home Depot ever
builds a new store. How many new stores will Lowe's allow Home
Depot to build? The answer is none because a company doesn't
turn over to its competition the authority to determine its best
interest and best course of action. He said if committee
members correctly answered this question they would vote against
HB 132. He said he has tried to imagine what would happen if
the president of the United States had offered this kind of
legislation before Congress or Alaska's governor and was limited
in what he could do with a pipeline project where more than 50
percent of the volume would be precluded from export. He noted
that there are lot of competing projects: 26 planned liquefied
natural gas (LNG) projects across the world, another 16 under
construction, and 27 others currently on-stream. Alaska's
competition has been keeping the state from moving forward with
a project. About the time the Alaska Gasline Inducement Act
(AGIA) was passed, Bill Walker was the general counsel and
project manager for the Alaska Gasline Port Authority (AGPA).
Those people paying attention to AGIA knew there was no way a
large diameter pipeline would be built to the Lower 48, and
Exxon knew the project was an uneconomic boondoggle. Five years
before AGIA was passed, the CEO of Exxon, Rex Tillerson,
acknowledged that Exxon knew that that pipeline project would
never be built. Bill Walker was able to get some language
inserted into the AGIA law that required an evaluation of going
to Valdez for an LNG export project. In about 2012 there was a
solicitation of interest that Exxon was required to hold and the
port authority was able to aggregate six companies into that
solicitation with a total aggregated volume of about 2.8 billion
cubic feet of gas per day, which is more than enough to develop
a large diameter gasline. Another entity, Resources Energy,
Inc. (REI), of Japan also had an aggregated interest for
companies that it represented out of Japan and was looking for
2.5 billion cubic feet of gas per day. So the total publically
disclosed interest in this solicitation of interest was over 5
billion cubic feet of gas per day, more than double what is
needed to get going a large diameter gasline and more than the
Alaska Oil and Gas Conservation Commission (AOGCC) allows for
offtake from Prudhoe Bay. So the market has demonstrated it is
interested in LNG out of Alaska. Interest was for the deep
water, ice free port of Valdez, which has a U.S. Coast Guard
vessel management tracking system, and most important, the
markets were looking for first gas by 2019. The bottom line is
that HB 132 is designed to tie the governor's hands and is a
very bad idea.
1:37:30 PM
HAROLD HEINZE stated he has lived in Anchorage for more than 40
years and has 50 years of experience in pipelines and oil
production having worked on North Slope gas issues for ARCO
Alaska and ARCO Transportation Company, as commissioner of the
Department of Natural Resources, as the senior resource
development advisor to Governor Hickel, and as CEO of the Alaska
Natural Gas Development Authority during three administrations
from 2003-2012. He thanked the committee for the opportunity to
address some important points in the legislature's direction of
the Alaska Gasline Development Corporation (AGDC). He said he
offered public comment in October 2013 at the first board
meeting of the newly formed AGDC where he encouraged the board
to: assure that the public is well informed of all aspects of
utilizing Alaska natural gas; to conduct business open enough on
a continuing basis that the public is brought along; and to
assure that all alternatives are considered and evaluated as to
the public good impacts. He has followed the progress of work
and reviewing available reports and is concerned that
alternative paths and alternative projects utilizing North Slope
gas have not been evaluated. For the special session to be held
this fall, an informed public is vital for the legislature's
major, incredibly important decision on proceeding to the
state's multi-billion dollar commitment to the Alaska LNG
Project. The legislature is picking the horse and should work
hard to assure that Alaskan's share the legislature's wisdom and
commitment. He suggested that HB 132 be amended to include
direction for full evaluation and publication of Alaska's
alternative projects and choices. In particular, the decision
on royalty-in-kind versus royalty-in-value should be fully
vetted and disseminated through the royalty board public
process. Additionally, HB 132 will probably be the only Alaska
LNG Project related legislation during this regular session and
this is the best opportunity for the legislature to direct
preparations for the fall special session on state involvement
with the North Slope producers. This fall the legislature will
be sitting as the "Alaska board of directors" making as big a
state fiscal decision as he remembers since 1969. It also will
be the riskiest decision that the state has ever made. Each of
the legislature's 60 members will be acting individually as a
fiduciary and the body must assure that each member has and
understands the information he or she needs to make a
responsible decision. Legislators have a six-month window to
develop and vet alternative projects, risks, and rewards. He
asked that the committee consider HB 132 as a positive vehicle
to instruct and focus the additional information requirements
for members and the public at large.
1:41:28 PM
REPRESENTATIVE TARR requested that the witnesses provide their
testimony to the committee in written form.
1:42:13 PM
CHARLES MCKEE noted that he testified last year regarding an
Alaska LNG line, but with the caveat not to include TransCanada
partnership because of the generation facilities imbedded in the
Lower 48 in TransCanada's agreement. He said he opposes HB 132
because of the possibility that a new generating infrastructure
could be included in which there is a pressurized line with
bypass generation that produces electricity off of the flow
within the pipeline, which is called bypass generating
facilities. This electricity could be re-routed into the
existing Railbelt power grid infrastructure to offset the cost
of electricity in Railbelt communities. This would be
automatically prohibited as the Alaska LNG Project currently
stands with TransCanada. It is being said [in HB 132] that the
size of this other line cannot be increased, but it also leaves
a window of opportunity to include these other existing
technologies that are not publically controlled.
1:45:57 PM
RICK KOCH, City Manager, City of Kenai, supported HB 132, saying
it is a prudent and necessary action to support and move forward
the long-awaited project to bring Alaska's bounty of natural gas
to Alaskans and to the world's markets. During his career of
managing the interest of state and municipal governments and
managing large-scale Alaska construction projects, he has gained
an understanding of how difficult it is to develop working
public/private partnerships. As a former board member of the
"Alaska Gasline Development Authority" he commends the
legislature for recognizing and addressing those inherent
difficulties in the enabling legislation which created the
Alaska Gasline Development Corporation. He said HB 132 provides
for safeguards in which the state can move forward in a mutually
supportive relationship with the major North Slope producers
while still protecting the state's interest in an alternative
project in the event that the Alaska LNG Project does not come
to fruition. Years of effort have been expended to create a
framework of trust and cooperation not unduly influenced by the
political whims of the next election. This framework must be
protected by not introducing opposing interest and distrust to
the project. In the event that the Alaska LNG Project decides
not to pursue construction of a large diameter gasline, the
state at that time will have every opportunity to modify the
scope of the Alaska Stand Alone Pipeline (ASAP) Project with the
benefit of feasibility, engineering, and permitting data
developed by the Alaska LNG Project and the ASAP Project. The
Alaska LNG Project and the ASAP Project, as presently developed
and further defined by HB 132, are Alaska's best opportunity to
realize the long-time goal of developing the natural gas on
Alaska's North Slope.
1:48:34 PM
PAT PORTER, Mayor, City of Kenai, stated that the present Alaska
LNG Project, the ASAP Project, and HB 132 establish the best
opportunity to bring North Slope gas reserves to the citizens of
Alaska and to world markets, specifically the Pacific Rim.
Successful megaprojects require decision making based on
extremely complicated and dynamic issues, such as the future
demand and market forces, not on political issues. The
legislature recognized this in the formation of the Alaska
Gasline Development [Corporation] (AGDC) and HB 132 simply
reinforces this process that has successfully moved the two
projects forward. The Kenai community looks forward to the
projects. Any successful project or business endeavor requires
that partnerships demand trust and common goals and HB 132
simply memorializes those critical understandings.
1:50:01 PM
BOYD ROCKY KNUDSEN expressed his opposition to HB 132 and said
that if the state is going to have a backup plan it should be a
viable backup plan.
1:50:49 PM
DAVID OTNESS said he sees many things about HB 132 that are
shutting off the free flow of information and direction that the
state should be going. During his 64 years of living in Alaska
he has been involved in oil company work, exploration, and the
Merchant Marine working out of Prudhoe Bay and Cook Inlet, and
he sees a lot of holes in the bill. He said he questions some
of its merits based on just the tides in Cook Inlet alone and
especially at Nikiski, given that LNG tankers are 100 feet
larger than U.S. aircraft carriers and are 20 stories high.
Safely moving such tankers around Cook Inlet is his number one
issue in terms of the route. The [previous] route was
established by voter approval in 2002. The years between 2003
and 2012 were invested in the Alaska Natural Gas Development
Authority (ANGDA) and now suddenly that isn't worth considering
relative to changing horses again. He said he is flabbergasted
by the way this thing is being railroaded and is definitely
opposed to HB 132.
1:53:02 PM
GEORGE PIERCE stated he is against HB 132, saying it doesn't
move anything forward but rather ties the hands of Alaska and is
bad for Alaskans. Competition is needed to ensure the state
gets a pipeline. He asked why committee members don't demand
answers from the oil companies like they do of Mr. Dan Fauske,
and added that the oil companies are not the state's partners.
There have been five pipeline proposals over the last ten years
with no results. The current governor wants to get a guarantee
on a pipeline and represent Alaskans. The person to talk to is
AGDC [president] Dan Fauske. He recalled Mr. Fauske stating
that the AGDC board has directed him to come back to the board
on April 9 [2015] with an estimate as to what work and cost
would be involved. The AGDC board asked Mr. Fauske to look at
an American National Standards Institute (ANSI) 600 pipe with
added compression as well as an ANSI 900 which would be stronger
steel for more compression. No LNG configuration is made in
this estimate. What changed was three members of the AGDC board
and the board wants to analyze real data. If the AGDC board
decides not to go forward with an LNG project, the state will be
without a backup, he said, and he agrees with the AGDC board
about having a for-sure plan rather than to have nothing. He
reiterated his opposition to HB 132, saying it is a bad piece of
legislation.
1:56:32 PM
GEORGE SITER stated he is a 20-year resident of Alaska, a Korean
War veteran, a retired police officer, and a Republican since he
was eight years old. He charged that the Republicans in the
Alaska State Legislature are acting like the Mafia to far left.
He said Bill Walker was elected [governor] by the average
citizen to get the best deal on LNG, with Alaska being the prime
beneficiary. Governor Walker also promised to get it done after
the legislature has done nothing for over 30 years. He said he
considers what legislators are doing as either a payoff from the
producers or as being out to ambush Governor Walker. It is
absurd to have a pipeline that cannot produce money from foreign
people to help pay for the gas and pay for everything else and
instead puts the whole burden on the people of Alaska. Had
legislators spent more time working for Alaskans, the pipeline
would have been operating years ago. Instead the Republican
leadership has given the state a mountain of debt, $10 million a
day, and legislators should be ashamed of themselves. He said
HB 132 is unintelligible and sponsored by traitors to Alaska and
he is opposed to it.
1:58:20 PM
RON HYDE said he grew up in Bush Alaska and has spent nearly 30
years in the Bush trying to make a living. A business owner on
the Kenai Peninsula, he said he is fully committed to a gasline
for Alaska. In particular, he is very supportive of the Alaska
LNG Project and as such he is not interested in going backwards
another 30 years and contemplating a bunch of new ideas. The
Alaska LNG Project is currently predicted to come directly to
Nikiski as was promised in Governor Walker's Kenai inauguration
speech, but that seems to have changed in the weeks after that
celebration. There is a lot of potential future economic
activity that will transform [the Kenai] region and the region
has a lot to gain. He has a lot invested already in the oil and
gas industry in Alaska, having worked directly and indirectly
with companies that produce oil and gas. He has been
responsible for hiring several hundred people and hundreds of
vendors and subcontractors, which created another several
hundred jobs for Alaskans. Point Thomson is an example of a
project that created hundreds of millions of dollars for Alaska
in revenue to Alaskans. In particular it will be one of the
cornerstones of the future of this gasline and it gave him the
opportunity to hire the workforce that he has hired over the
years. It seems to take disasters to bring Alaskans together
and disasters create economic uncertainty, test human spirit,
change qualities of life, and can cause communities to become
stagnant and destitute for years. The governor's flip flopping,
broken commitments, and suggestion to cheat on Alaskan citizens
and business partners with a competing gasline will derail the
work that has been done, the hundreds of millions of dollars
that have been spent, and the momentum that is in place right
now to give Alaska a gasline today, and he is embarrassed by it.
Project certainty is one thing that these companies look at when
trying to decide what to do with a project and how to take it to
the shareholders. In this case the State of Alaska has not
demonstrated to him that there is project certainty in making
ASAP bigger and taking another 10-30 years to make it be
whatever Governor Walker wants it to be. Right now there is a
project that if the state acts as an ethical partner will gain a
gasline for Alaskans in the foreseeable years. Uncertainty is
being created through the voice of Governor Walker and this
needs to be looked at if Alaska is to attract business and
investment.
2:03:34 PM
FELICIA KEITH-JONES, High Mark Distillery, Inc., offered her
support of the Alaska LNG gas pipeline. She said she is very
interested in getting clarity as to whether the project will
continue forward or has come to a standstill. This pipeline is
very important to her small community, and local businesses are
in limbo as to whether to expand to accommodate a larger
population or to button down the hatches. Her distillery
depends completely on the population to be a viable industry and
also drives a large tourist revenue and the distillery is able
to produce that revenue only if it knows where the community
stands. She personally has rental properties and investment
real estate and doesn't know whether she should continue to
improve and grow that or make sure she is safe and secure. She
said she wants to know which way to grow and that she wants
clarity from the governor. She reiterated her support for
continuing the Alaska LNG pipeline in her community.
The committee took an at-ease from 2:06 p.m. to 2:07 p.m.
2:07:36 PM
CO-CHAIR NAGEAK closed public testimony.
2:08:32 PM
CO-CHAIR TALERICO moved to report the proposed committee
substitute (CS), Version 29-LS0623\P, Nauman, 3/11/15, out of
committee with individual recommendations and the accompanying
fiscal notes.
REPRESENTATIVE JOSEPHSON objected for purposes of discussion.
2:08:57 PM
REPRESENTATIVE JOSEPHSON noted that in a previous committee he
said he liked Senate Bill 138 and he continues to like that bill
and is proud to have voted for it. Even before he was elected
everybody seemed to be in favor of a large gasline and he has
never heard anyone opposed to it. He related that when he asked
about why the limits of no more export available than [Alaska]
consumes, about 240 million cubic feet, he found the answer a
little dubious and it seemed a bit arbitrary for a demarcation
about what ASAP should be allowed to produce. He noted there
were 23 committee hearings on House Bill 4 and in reviewing
those minutes he didn't see anything that precluded what AGDC is
doing in making a pivot. He said he thinks House Bill 4
anticipated and even invited this adjustment. In the minutes
there was often the comment that if the cap of the Alaska
Gasline Inducement Act (AGIA) was lifted then all systems were
go and this could go just about in any direction. He related
that when he asked Mr. Richards and Mr. Fauske [of AGDC] if any
statute or previous agreement like the Heads of Agreement (HOA)
or Memorandum of Understanding (MOU) precluded what they were
doing the answer was no. And no one at the hearing,
particularly yesterday, provided a response that indicated Mr.
Richards or Mr. Fauske were incorrect and that somehow what they
were doing is precluded from some existing law or agreement.
2:10:57 PM
REPRESENTATIVE JOSEPHSON continued, saying he remains personally
protective of and invested in Senate Bill 138. He offered his
agreement that it is the furthest along the stage-gated path
that Alaska has come on a gasline. The comment about a slowing
of the environmental impact statement (EIS) process made him
anxious because he doesn't think Alaska can afford a whole lot
of pauses. On the other hand, he said he has read and heard
countless times that no more than half of these plans will ever
be developed. When Mr. [Larry] Persily was sending legislators
the progress of the worldwide LNG market, he took it that Mr.
Persily was educating legislators as well as advising them that
this is a competitive world. Having some options is wise and
gives the state more leverage with its North Slope leasehold
allies. Many negotiations remain to be done and anything that
would strengthen the state's bargaining position should be
encouraged. The industry has not given any specific indication
that anything the governor has proposed or is proposing has
given the industry particular reservations. The governor did
run on a platform different than the previous governor's in many
respects, including how the state develops and produces gas
fields, so none of the governor's position is surprising. If
the administration had proposed a pure defense of Senate Bill
138, all in with no strings or adjustments, that would have been
newsworthy. During House Bill 4 testimony it was heard
repeatedly that a single year's delay would cost the small
gasline $200 million in inflation. Arguably, that statement
could be used in just about any direction. However, he said he
thinks the same, if it applies here, would suggest that the
state needs to have a legitimate alternative. He offered his
hope that in about 18 months this matter will become moot and it
will be known whether Exxon, Conoco, and BP are prepared to
enter into the front-end engineering and design (FEED) phase and
at that point people will be investing in the low billions of
dollars. That would be a strong sign that the Alaska LNG
Project is moving forward and may truly happen, but until that
time the state needs some options.
2:13:22 PM
REPRESENTATIVE HAWKER concurred that everything said by
Representative Josephson is solidly grounded in fact. However,
he continued, what might be at issue is how the facts are
interpreted and amalgamated into the larger construct of where
things are at and where they are going. There is a long history
behind getting to where things are today with developing
Alaska's North Slope natural gas. This effort began about five
or six years ago with House Bill 369 when the legislature
originally directed the Alaska Housing Finance Corporation to
create the AGDC subsidiary and embark upon developing a project
plan for getting Alaska's gas into the hands of Alaskans. At
the time most everyone recognized that the AGIA effort was not
going to succeed. House Bill 369 gave way to House Bill 9,
which was the first effort to create a stand-alone gas company
and House Bill 4 succeeded in doing it - it was crafted into
House Bill 4 that should the AGIA limitation go away the project
could morph into something larger. House Bill 4 even gave AGDC
the authority to be Alaska's gasline company to pursue whatever
project gained the most viability and was able to move forward
while the state always had in its back pocket the pipe that has
become called ASAP.
2:15:41 PM
REPRESENTATIVE HAWKER continued, recalling that with the
vagaries at the time industry didn't know where it was going,
there was no big project, the Lower 48 project had gotten
stymied, but the state had that backup project. The legislature
said that if the state has to, the state will do it alone. Then
came Senate Bill 138 last year, which was a big decision because
it was where the horse to ride was chosen. The choice between
projects was made last year, so that is not before legislators
today. Through Senate Bill 138, the legislature chose to
endorse and throw the entire weight of the state behind the
concepts, mechanisms, and financing encompassed in the bill.
The state is in fact moving forward with the big project and HB
132 is about continuing to move forward and not going backward.
It is about maintaining that momentum in the most cost-effective
manner possible. He agreed that the state still has its backup
project. If that big project falters, the state has created an
entity in AGDC and money is sitting there and all of those
resources will immediately be redirected in grabbing that backup
project and it will go forward full speed. He said HB 132 keeps
the state from riding two horses at once by going forward
simultaneously and thereby creating a competing project out of
the backup project. He said it is the "backup project
protection act" to ensure money is there when it is needed and
ensuring the backup project is ready to go. The intent of HB
132 is to keep momentum going with the big project, to preserve
and protect the backup project, and to ensure the money is
sitting there should it be needed.
2:18:52 PM
REPRESENTATIVE TARR said some of her concerns have been raised
already. She agreed that not having the AGIA constraints gives
an opportunity to reconsider and have that flexibility. She
said what she finds striking is that the state hasn't heard from
any of its industry partners in either support or opposition of
HB 132, which makes her wonder if they see that there may be a
new opportunity without the constraints of AGIA. The proposal
presented to the committee yesterday by Mr. Fauske gives AGDC
three and a half weeks given that the information will be
presented at the April 9 AGDC meeting. The most concerning
thing she heard yesterday was the pause in the EIS work because
no delay is wanted, although, three and a half weeks is a short
amount of time to see what information is brought back and
whether it can be crossed off or is an even better option for
the state. The legislature will still be in session and will
have the opportunity to make a decision at that time, perhaps
armed with new information about another opportunity that might
be even better.
2:20:27 PM
REPRESENTATIVE SEATON said he thinks that when the initial
projects were being constructed to go forward with ASAP and
AGDC, everyone recognized that the constraint was always a
pipeline of 500 million cubic feet a day and the development
going forward was designed on that. Regarding the idea that the
backup project is ready to go, he said he is not sure that is
the case if it is going to be said that the only backup project
is the project for 500 million cubic feet per day, and he
doesn't know where the state is at on that section of things.
What bothers him somewhat is that the legislature has created
AGDC with an independent board and an independent function to go
forward to do actions for the state, but now it is being said
that the new configuration of the AGDC board and the board's
decision are disliked and so the legislature is going to pass a
law to override the board's decision. That is because Mr.
Fauske came before the committee and said he had been requested
by the board to explore these two other options and with this
bill [the legislature] is saying no he won't for a certain
period of time.
2:22:10 PM
REPRESENTATIVE SEATON continued, stating that the certain period
of time gives him some comfort. He said he is in a dilemma
because he doesn't want to see a competing project interfere
with the progress being made on the Alaska LNG Project and a
dilemma as to how far into this independent agency does the
legislature go to tell AGDC that the legislature is making the
decisions now instead of the board. It is a balancing issue.
He said he is not going to ask to delay the bill, but he doesn't
think anything is clear cut one way or another. He doesn't want
the state's partners in the Alaska LNG Project to think that the
state is jumping ship because he doesn't think exploring the
option of what would the backup be at a larger diameter or
throughput capacity is jumping ship; rather, it is better tuning
the backup in case a final investment decision is not reached to
go forward with the Alaska LNG Project. He said he is not
entirely convinced the bill is needed, but he doesn't think it
is going to be a big impediment. He added that he wants the
committee to know he is unsure of where things are and he is
considering both sides of the issue.
2:24:51 PM
REPRESENTATIVE HERRON opined that Senate Bill 138 was passed by
the legislature and signed by the executive branch, so it is the
policy. The new governor could have introduced a bill stating
what the governor wants. He said he finds that troubling and
that is why he is one of the sponsors of HB 132, which is a
reaction, through legislation, to create a policy related to
this matter. It bothers him that the executive branch, by
verbal edict, wants to go in a different direction. The
legislature is having this dialogue and debate in a public way,
the legislature should decide what is important. He said he
supports moving HB 132 out of committee and to another committee
regardless of all these other timelines. If the [AGDC] wants to
make its decision as an independent body, so be it. However,
the legislature should not sit on this legislative process and
let the other branch do it by verbal edict.
2:27:13 PM
REPRESENTATIVE JOHNSON stated he is troubled by a couple of
things. The EIS being put on hold raises a red flag, it shows
the federal government clearly sees a competing project. The
governor's language that it is a race to the finish line is
concerning because that shows competition. In regard to waiting
until April 9, he pointed out that this date is only 10 days
before the end of session. In regard to the analogy of Home
Depot and Lowe's, he said he thinks the new hardware store
moving next to Lowe's is a Lowe's. The state is competing with
itself and neither Lowe's nor Home Depot would do that. He said
he hasn't seen anything yet from AGDC, the administration, or
the producers that says this is a good idea. He said he would
like to move HB 132 and get it positioned to be moved on if
necessary as stalling the bill would be a tragedy.
2:28:35 PM
REPRESENTATIVE OLSON said his biggest concern is the governor's
aversion to put out his own bills and testifying his positions.
The governor can talk about his position but until it is seen in
writing the legislature is second-guessing what the governor's
intentions are. As the session progresses, perhaps more bills
will be seen that outline the direction the governor wants to
go. The public is being precluded from any testimony on the
governor's views, the public only gets to testify on the
legislature's views. [A bill from the governor] would make it a
much clearer process.
2:29:33 PM
REPRESENTATIVE JOSEPHSON maintained his objection to reporting
HB 132, Version P, out of committee. He stated that Mr. Steve
Butt, the manager for the Alaska LNG Project secunded from
Exxon, has been very impressive. He said he has thought about
Mr. Butt because nothing that he has heard about Senate Bill 138
has moved one inch. In other words, there has been no "well, we
said that then but now we mean something different" and he
therefore thinks the plan has some credibility because of that.
Representative Josephson further commented that while it's true
the governor wants to look at options, the governor has also
said that Senate Bill 138 needs to process and progress in the
way it has.
2:30:36 PM
A roll call vote was taken. Representatives Herron, Hawker,
Johnson, Olson, Seaton, Talerico, and Nageak voted in favor of
reporting the proposed committee substitute, Version 29-
LS0623\P, Nauman, 3/11/15. Representatives Josephson and Tarr
voted against it. Therefore, CSHB 132(RES) was reported out of
the House Resources Standing Committee by a vote of 7-2.
The committee took an at-ease from 2:31 p.m. to 2:35 p.m.
2:35:24 PM
REPRESENTATIVE OLSON requested a verbatim transcript of the
committee's 3/13/15 meeting.
CO-CHAIR NAGEAK thanked the witnesses for testifying on HB 132.
2:37:55 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 2:38 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 3.11.15 HRES CSHB 132 - Version P.pdf |
HRES 3/14/2015 1:00:00 PM |
HB 132 |
| 3.11.15 HRES CSHB 132 Summary of Changes CS version P.pdf |
HRES 3/14/2015 1:00:00 PM |
HB 132 |
| HB 132 HRES LOS - M Prax.pdf |
HRES 3/14/2015 1:00:00 PM |
HB 132 |
| HB 132 HRES L Willis Testimony 3.6.15.pdf |
HRES 3/14/2015 1:00:00 PM |
HB 132 |
| 3.14.15 HRES HB 132 A LeMaster Ltr of opposition.pdf |
HRES 3/14/2015 1:00:00 PM |
HB 132 |
| 3.6.15 HRES HB 132 - H Heinze comments 3.17.15.pdf |
HRES 3/14/2015 1:00:00 PM |
HB 132 |
| 3.14.15 HRES HB 132 - The Alliance - Letter of Support.pdf |
HRES 3/14/2015 1:00:00 PM |
HB 132 |