Legislature(2025 - 2026)BARNES 124
05/15/2025 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| HJR26 | |
| HB119 | |
| HB206 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HJR 26 | TELECONFERENCED | |
| += | SJR 19 | TELECONFERENCED | |
| + | HB 119 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 206 | TELECONFERENCED | |
HB 119-GAS PIPELINE FAIRBANKS SPUR
1:49:23 PM
CO-CHAIR BURKE announced that the next order of business would
be HOUSE BILL NO. 119, "An Act relating to an in-state natural
gas pipeline developed by the Alaska Gasline Development
Corporation; and providing for an effective date."
1:46:34 PM
CO-CHAIR DIBERT moved to adopt the draft committee substitute
for House Bill 119, work order number 34-LS0613\G as a working
document.
CO-CHAIR BURKE objected for the purpose of discussion.
1:50:03 PM
BERNARD AOTO, Staff, Representative Will Stapp, Alaska State
Legislature, explained that the committee substitute removed the
spur line language under subsection 5 of the Alaska Gasline
Development Corporation (AGDC) charter. He pointed out that
work order number 34-LS0613\G was drafted to clarify the
language of a previous CS and remedy a miscommunication.
1:51:36 PM
CO-CHAIR BURKE removed her objection. She announced that the
committee substitute for HB 119 was before the committee.
1:51:54 PM
REPRESENTATIVE WILL STAPP, Alaska State Legislature, explained
that HB 119 seeks to eliminate a long-standing problem for
residents in the interior. The conversation had moved forward
regarding the development of a gas line project as proposed with
AGDC and majority owner Glenfarne. The current proposed route
of the pipeline would bypass Fairbanks, the second largest town
in Alaska. The bill sought a mechanism to remedy that
disservice. He referenced the sale of 75 percent ownership in
the line by AGDC which created difficulties in terms of the
bill. Part of a fiscal note received from Mr. Richards stated,
in part, that Glenfarne acquired the majority of interest in 8
Star, LLC, Alaska, which was the privately held subsidiary of
AGDC. That made Glenfarne the majority owner. The fiscal note
stated, "AGDC does not have the right to change the scope of the
Alaska LNG project." He also noted that Mr. Richards referenced
the agreement with Glenfarne, but he was not aware that any
member had the opportunity to read what was actually in that
agreement. It seemed that no member had the opportunity to read
what was in the agreement prior to it being finalized.
Representative Stapp then explained that two sections of HB 119
were relatively simple, adding language that would codify in
statute that an all-Alaska line, if advanced, must include a
direct spur to the city of Fairbanks and the North Star borough.
The second section that was added specified that proceeds of the
sales of the gas line would be for the purpose of bringing gas
to all Alaskans. He explained that the concept was to create a
fund to ensure that Alaskans share the proceeds of monetizing
the North Slope gas
1:55:12 PM
MR. AOTO explained that Representative Stapp covered everything
in the sectional analysis except section 3 which created an
immediate effective date.
1:55:56 PM
FRANK RICHARDS, President, Alaska Gas Line Development Corp,
responded to a question from Representative Coulombe regarding
the permitting for a Fairbanks spur line. He referenced
language imbedded in paragraph 4 regarding the Alaska stand-
alone pipeline project, which was the in-state line for North
Slope gas to be used in Alaska. That was the outcome of a
feasibility study in 2012 when the legislature appropriated
funds for the design of the in-state project which was a 36-inch
diameter main line with a spur into Fairbanks that was a 12-inch
line. That project went through engineering and design, and it
went through the permitting process, but not all the permits
were obtained. The right of way was provided to AGDC for that
pipeline project, and AGDC still retains those designs leading
into Fairbanks. He explained that the difference between the
two projects is that one of them did not include the spur line.
1:58:33 PM
REPRESENTATIVE STAPP addressed a series of questions from
Representative Coulombe regarding the spur line. He explained
that the diameter of the pipeline probably doesn't matter that
much and quoted the saying, "It doesn't matter if the cat is
black or white so long as it catches the mice." He said people
needed to know that if the export project were to go into final
investment decision, they would break ground on a main line but
would skip the second largest town in Alaska. He referenced Mr.
Richards statement that not all permits had been obtained. He
described several factors influencing the permitting of projects
as well as time frames regarding the main line and an off-take
line for the purpose of developing a spur line.
2:00:16 PM
REPRESENTATIVE STAPP responded to a question from representative
Saddler regarding the amendment by explaining two problems.
First, because of the agreement with Glenfarme, AGDC no longer
had the right to make changes to the scope of the development
project. Second, there would be potential risk to the project
because they are permitted under two different sections of
permitting, i.e. Federal Energy Regulatory Commission (FERC) and
the Army Corps of Engineers.
2:01:28 PM
MR. RICHARDS responded to Representative Saddler's request for
clarification regarding why language had been changed between
the previous version and the current version. He explained that
a fiscal note had been created based on the previous version
included in the Alaska LNG project. He said Representative
Stapp was correct in saying that AGDC's agreement with Glenfarne
regarding the Alaska LNG project as permitted through the FERC
process did not include a lateral into Fairbanks. From the
perspective of AGDC, opening up the spur line permitting would
add significant potential environmental and regulatory risk to
the project proceeding forward, so they waived that issue due to
timing, costs, and permitting. In addition, it had been decided
to move the mainline off-take line because the new proposal
included uplands which were less environmentally sensitive.
2:04:21 PM
REPRESENTATIVE STAPP responded to a question from Representative
Saddler regarding the system of natural gas line plumbing in the
city of Fairbanks as well as the North Star borough. He
explained that technically both pass through the North Star
borough and described who in the area would be getting direct
gas.
2:05:59 PM
REPRESENTATIVE STAPP, in response to a question from
Representative Elam, described some of the history, referencing
the former project's design which would have passed 30 miles
from Fairbanks. Since that time, Fairbanks developed what was
called the Interior Gas Utility for the purpose of trucking
liquified gas from the North Slope liquification plant. Trucks
would transport LNG from the slope to Fairbanks. He explained
that the issues include costs, tariff rates, and the mechanics
of de-liquifying the gas and compared that to the costs of
tariffs and amortizing of the gas line. He pointed out the
potential irony of being halfway from the source of gas compared
to Anchorage but possibly paying double the costs for gas.
2:09:50 PM
FRANK RICHARDS addressed a request from Representative Mears to
verify that the tariffs for Fairbanks would be in addition to
tariffs for the entire pipeline and how that tariff is
structured so that Fairbanks is not in addition to but is rather
a part of the tariff structure. He reminded the committee that
AGDC has a signed Memorandum of Understanding (MOU) with an
Alaskan pipeline company that wants to take on the ownership,
permitting, design, and construction of the spur line into
Fairbanks. The cost analysis for the buildout was based on
numbers from 2014, and since that time, the demand in Fairbanks
has gotten smaller, so the construction costs need to be
considered as well as an optimal design. He said that the full
responsibility for determining tariff rates will go through the
Regulatory Commission of Alaska which is looking out for the
well being of Alaska. He compared the Fairbanks situation to
South Central when Enstar brings on new lines.
2:12:11 PM
REPRESENTATIVE STAPP agreed with Representative Mears that the
spur needs to be included in an overall tariff, but this bill is
probably not the place for that discussion.
2:12:58 PM
FRANK RICHARDS responded to a series of questions from
Representative Stapp. He explained that the MOU he referred to
was with AGDC and was part of the Alaska stand-alone pipeline
project, but was not part of the agreement transfer to
Glenfarne. Regarding whether there was an MOU under the
existing mainline project, he explained that there was an
interconnection or an offtake point near the Chatanika River.
That would be the point where a spur line would start for
delivery of gas to Fairbanks. In response to further questions
requesting clarification about what that interconnection would
actually be, he described it as a valve and a depressurization
unit. This would enable off-taking gas to another entity who
would then have the construction, operation, and maintenance
responsibilities for a spur line into Fairbanks.
2:15:08 PM
REPRESENTATIVE STAPP agreed with Representative Coulombe's
observation that that South Central would be charged tariffs by
Enstar which would represent the costs of carrying gas from A to
B and that there would be a tariff for gas to Fairbanks. He
acknowledged the potential for the capital costs plus the tariff
to operate the pipeline both landing on Fairbanks, which would
lead to higher tariffs for Fairbanks. He pointed out that the
state had invested heavily in a gas export line that would not
benefit a vast majority of people despite running within 30
miles of a large population center. If the costs were to be
amortized, the cost to the Fairbanks residents would be
substantially higher.
2:18:14 PM
REPRESENTATIVE STAPP addressed several questions from
Representative Rauscher, explaining that the Interior Alaska Gas
Utility (IGU) had been building gas infrastructure in Fairbanks
with the expectation of a gas line to the town. Regarding the
comment that the amortization would be "extravagant," he
suggested it would be less so than "the billions of dollars
dumped into Cook Inlet to subsidize producers for production."
He commented that adding customers would result in lower rates
because of economy of scale wherein a cheaper source of fuel
would attract more customers. Ideally a gas line would enable
customers to spend less money on heat.
2:21:02 PM
MR. AOTO responded to Representative Rauscher's question
regarding a study on this issue. He explained that the Wood
Mackenzie study [November 2024] assumed Fairbanks would consume
11 billion cubic feet (Bcf) if the gas pipeline was built
compared to the UGI consumption rate estimate of 1.5 Bcf. That
study assumes an overhaul to enable usage by the larger
customers such as the University of Alaska Fairbanks, Fort
Wainwright, and the Eielson Air Force Base. He explained that
the study did not necessarily account for the time and expense
of putting in the power plants that would be able to receive
that natural gas.
2:21:56 PM
REPRESENTATIVE STAPP responded to Representative Saddler's
question regarding the fiscal note for HB 119, explaining that
the numbers were based on ADGC operating the pipeline, and the
numbers would change under a different scenario.
2:24:13 PM
MR. AOTO clarified the result of the new committee substitute
regarding gas line connections throughout the state of Alaska.
2:24:45 PM
FRANK RICHARDS responded to a question from Co-Chair Burke
concerning which permits had not been received. Mr. Richards
said AGDC had strategically focused on acquiring major permits
that derisk the project, but that there was an Army Corps of
Engineers wetlands permit the project had not fully received.
2:26:08 PM
FRANK RICHARDS responded to a question from Co-Chair Burke
concerning which permits had not been received. [Due to poor
sound quality, portions of the audio are indiscernible.]
2:28:27 PM
There being no further discussion HB 119 was held over.
2:28:47 PM
The committee took an at-ease from 2:28 p.m. to 2:30 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| draft RES CS HB 119 ver G.pdf |
HRES 5/15/2025 1:00:00 PM |
HB 119 |
| HB 206 Presentation HRES 5.14.pdf |
HRES 5/15/2025 1:00:00 PM |
HB 206 |
| HB 119 Summary of Changes N to G.pdf |
HRES 5/15/2025 1:00:00 PM |
HB 119 |