Legislature(2025 - 2026)GRUENBERG 120
03/06/2025 03:15 PM House STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| SB43 | |
| HB91 | |
| HB81 | |
| HB119 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 43 | TELECONFERENCED | |
| += | HB 81 | TELECONFERENCED | |
| += | HB 91 | TELECONFERENCED | |
| *+ | HB 119 | TELECONFERENCED | |
| += | HB 30 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 119-GAS PIPELINE FAIRBANKS SPUR
4:22:11 PM
CHAIR CARRICK announced that the final 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."
4:22:35 PM
REPRESENTATIVE WILL STAPP, Alaska State Legislature, As prime
sponsor, presented HB 119. He said the proposed bill is
relatively simple on the surface, but it is not a simple
concept. He said that as many committee members knew, the
Alaska Gasline Development Corporation's (AGDC's) project has
been the source of "lots of news," especially at a federal
level. He opined that members from Interior Alaska have always
felt that if any gasline infrastructure were developed, the
project - if funded with state money - should not skip interior
communities in the project's vicinity. He pointed to a map
[copy available in committee file] that highlights the Alaska
liquified natural gas (LNG) projects area of operation and
relative location to Interior communities. He said that the
pipeline would run through most major communities in Alaska;
however, it bypasses Fairbanks and is positioned to the east of
the community. He remarked that every time he has spoken with
Frank Richards with AGDC and asked whether Fairbanks would get
gas, the answer has almost always been that there would not be a
gasline built in the state in the event it skips Fairbanks. He
said that he has not had any definitive assurances that a
project would not, in fact, skip the Fairbanks North Star
Borough
REPRESENTATIVE STAPP said that the purpose of HB 119 is
assurance to the 100,000 people that a project would not skip
the Fairbanks North Star Borough. He noted that a spur line
would connect Alaska LNG with Fairbanks. He noted there had not
been any meaningful progression in terms of permits or rights of
way.
REPRESENTATIVE STAPP noted that HB 119 would add a requirement
to the list of things that AGDC must do for the State of Alaska.
This additional requirement appears on page 2, lines 9-11, and
read as follows [original punctuation provided]:
an in-state natural gas pipeline advanced under this
paragraph must include a direct spur line to the City
of Fairbanks and the Fairbanks North Star Borough;
REPRESENTATIVE STAPP explained that if there is going to be a
gasline developed in Alaska with state resources, it should not
skip the second largest town in the state. He welcomed
questions from the committee.
4:26:40 PM
REPRESENTATIVE MCCABE asked what the distance was between the
proposed Alaska LNG gasline and Fairbanks.
BERNARD AOTO, Staff, Representative William Stapp, Alaska State
Legislature, on behalf of Representative Stapp, prime sponsor of
HB 119, responded that the proposed gasline would be
approximately 40 miles from Fairbanks.
REPRESENTATIVE MCCABE commented that he has always found it
ridiculous that Fairbanks is 475 miles from the largest gas
field on the planet but burns heating oil that originates from
Alaska and is sent down to Washington refineries before being
imported once again. He said that it can cost $600 to $900 a
month for heating oil costs in Fairbanks.
4:27:25 PM
CHAIR CARRICK noted that as someone who pays these high heating
oil costs, Representative McCabe's comment "hit home." She
asked Representative Stapp to elaborate on the current cost of
energy in Fairbanks relative to other communities such as
Anchorage or even other communities along the proposed pipeline.
4:28:08 PM
REPRESENTATIVE STAPP responded that currently the residential
electricity rate in Fairbanks is about 27 cents a kilowatt
whereas Anchorage is lower. He said that he has been in Juneau
during the legislative session and his recent Golden Valley
Electric bill was more than $350 for his home. He said that it
is not currently occupied other than two cats; the fridge is on,
the boiler is running and maybe a light or two is on. He said
this puts Fairbanks energy prices into context for what expected
rates could be.
REPRESENTATIVE STAPP remarked that most of Fairbanks power is
generated from either coal or oil, and oil is substantially more
expensive than natural gas. He said that this impacts every
aspect of the town, including education. He said that for every
dollar invested into education, more of it would go to energy
costs in Interior communities with high energy costs. He said
that Fairbanks sees outmigration that is more intense than other
parts of the state due to these high energy costs. He said that
the state has put a lot of economic resources into Cook Inlet
gas development over the years to ensure that the state's
population has affordable gas prices; however, Fairbanks has
never had access to a stable supply of natural gas. He said
that a few years ago, in anticipation of getting gas off the
North Slope, Fairbanks formed its own public utility called
"Interior Gas Utility" to build domestic gaslines. He said this
service via the Alaska Industrial Development and Export
Authority (AIDEA) was being paid by Fairbanks residents. He
said that he was unaware who made and paid for the gas
connections in Interior.
4:31:06 PM
REPRESENTATIVE HOLLAND said that he read through the fiscal note
and analysis, and he asked if Representative Stapp could
elaborate on it.
REPRESENTATIVE STAPP responded that all the proposed bill would
do is insert language into a portion of the project that is not
current pursued by AGDC.
REPRESENTATIVE HOLLAND said that he is guessing the obvious
question is why this is not already being done.
REPRESENTATIVE STAPP responded there could be multiple proposed
committee substitutes "until the mood improves."
4:33:08 PM
REPRESENTATIVE MOORE asked whether there has been any opposition
to the proposed bill.
REPRESENTATIVE STAPP responded that most of the feedback has
been fairly positive. He said most people concur that gas
should be available to Fairbanks if a gasline is developed. He
reiterated that the response from AGDC has been vague. He
commented on the uncertain nature of who pays the costs and said
that these questions are the most important ones as the project
progresses.
4:35:00 PM
REPRESENTATIVE MCCABE asked whether Representative Stapp has
inquired whether building a spur at the same time as the main
pipeline was discussed or even whether to place the gasline
closer to Fairbanks would make sense.
REPRESENTATIVE STAPP responded that in theory there was supposed
to be an off-take valve made near Fairbanks during construction.
He noted that it does not make a lot of sense to build a $50
billion project but then assume that in the uncertain future and
with an uncertain cost that a $150-200 million spur line will
get constructed. He said that this reminds him of when Senator
Ted Stevens got gas infrastructure developed in Prudhoe Bay.
Ted Stevens felt that since he failed to get the Arctic National
Wildlife Refuge (ANWR) included on the deal then it probably
wouldn't be part of the deal in the future. He said that today
this remains the case. He spoke about GRIP funding in the past
and the failure for previous projects to materialize. He said
that often it is heard that if you wait your turn you will be
next in line and then next in line never happens.
4:37:37 PM
REPRESENTATIVE HIMSCHOOT noted that her district was looking
forward to getting natural gas to Alaskans and asked what form
of energy Fairbanks currently used.
REPRESENTATIVE STAPP replied that the town primarily runs off
oil fire heat; he has oil boilers at home for instance. He said
that lots of money has been invested to accommodate natural gas
heating, which is both less expensive and burns cleaner than oil
fired sources.
REPRESENTATIVE HIMSCHOOT asked whether the goal was to convert
the Fairbanks power plant to natural gas but not necessarily
homes to natural gas. She also asked what the extent of energy
transition was for Fairbanks.
REPRESENTATIVE STAPP responded that Fairbanks goals regarding
energy improvements is multi-pronged. He said Golden Valley
Utility has pursued a diversified strategy regarding energy
production, including the state's largest wind farm. He said
that the city is also converting residential homes to gas. He
said that Fort Wainwright has an antiquated coal plant that it
is looking to replace; it is the second largest military base in
Alaska. He said "gassifying" Fort Wainwright is an objective
shared by federal partners, as well. He said that until a
reliable and stable source of gas is available, these
conversions cannot commence.
REPRESENTATIVE HIMSCHOOT asked, if a spur that connects
Fairbanks to the pipeline were built, who would maintain it and
who would own it.
REPRESENTATIVE STAPP said that this is the purpose of HB 119.
He said that he would like to know this as well. He said that
management for this section of energy infrastructure is somewhat
vague. He said that Frank Richards with AGDC was online and
could speak to this.
4:40:46 PM
CHAIR CARRICK commented that Fairbanks was unique in that it
already has an "all of the above" approach to energy and there
was little consistency amongst the municipality. She said that
the municipality had a new coal plant on the University of
Fairbanks campus capable of burning natural gas for fuel, they
don't because it is not currently cost effective. She said that
many homes still heat with wood due to its low cost, but it
adversely impacts air quality. She said that Frank Richards
could speak to operation and maintenance of any spur line
connection.
4:41:44 PM
FRANK RICHARDS, President, Alaska Gasline Development
Corporation, answered that that Section of AS 31.25.005,
regarding the purpose of the corporation, addresses advancing an
in-state natural gas pipeline, and it was the original language
that was provided to AGDC when looking at opportunities to
develop an in-state line to provide natural gas to Fairbanks and
to the south. He said this is referred to as the "in-state
project," and the legislature provided funding not only for
permitting but also for design work on the project. He noted
the design work includes a lateral spur into Fairbanks. He
pointed out the map that was provided to committee members [copy
available in committee file] and noted that a connection point
would allow for a lateral spur leading into Fairbanks before the
pipeline would continue south and connect with pre-existing
Enstar natural gas system in Southcentral Alaska. He said that
this design work was conducted from 2012 to 2015 and AGDC had
completed what is known as the "front-end engineering and
design". He said that AGDC was granted the "right of way" for
both the mainline and the lateral line into Fairbanks. He said
that the work on the lateral line was been advanced in 2015 with
what is called the "class 3 cost estimate." Additionally, the
legislature gave AGDC the responsibility in 2014 to represent
the state for the Alaska LNG project. He said ultimately in the
2016 and 2017 timeframe, the legislature redirected all the
funds available for advancing the "in-state project" and it was
put on the shelf. However, AGDC still owns the designs and the
permits that were granted for the 32 miles for the lateral line
connection into Fairbanks, also known as the Spur. He said that
plenty of work has been done advancing the lateral line project.
Currently, AGDC has been waiting for stakeholders to come
together and finalize something that is economically and
commercially viable, and Glenfarne Group was a part of this
process.
MR. RICHARDS noted that there has been keen interest from Alaska
Pipeline developers to come in and take responsibility for
connecting the Fairbanks spur line with the main line of the
Alaska LNG project. He said that information would continue to
come forward as discussions take place. This developer would
likely update the "front end engineering design" and run this
effort in parallel with work completed on the Alaska LNG
project. He said that those entities that develop this project
would have the commercial arrangement regarding gas offtake for
Fairbanks.
4:47:05 PM
REPRESENTATIVE STAPP said that he appreciated the history and
how AGDC looked at these things. He questioned why, if all
these things have already been completed by AGDC, the
corporation wouldn't roll them in and include the Fairbanks
lateral line into the project.
MR. RICHARDS responded that it had to do with the regulatory
environment. If the in-state natural gas was done by an Army
Corps of Engineers Impact Statement and the Alaska LNG was taken
as an integrated project under the Federal Energy Regulatory
Commission, then two different authorizations are in place. He
said that adding the lateral line to the Alaska LNG project
would cause additional regulatory hurdles. He said that there
are two entities at play.
REPRESENTATIVE STAPP said that this illustrates his point. He
said he understands that there are different permitting
processes, but questioned why AGDC would go through the permit
process for 800 miles of pipeline and not get the additional 32
miles permitted for a spur project.
MR. RICHARDS explained that when AGDC was working with the joint
development partners, the design concept that was put forward
for the permitting process was an integrated project that did
not include any laterals. He said that this was not a choice by
AGDC but the lead developer at the time.
4:50:44 PM
REPRESENTATIVE VANCE said that she appreciates Representative
Stapp asking these questions. She asked how long the permits
are considered valid and whether they could move forward with
current permitting.
MR. RICHARDS responded that he did not have an answer on
duration of permits from the Army Corps of Engineers but could
follow up with an answer.
REPRESENTATIVE VANCE said that pulling up the map of the
proposed pipeline, she shares the frustration that the second
largest city that contains many state expenses was not
integrated into the main project. She said that getting natural
gas to the Kenai Peninsula was transformative for its residents
in a positive way. By including the spur line into Fairbanks,
it would decrease energy costs. She questioned holding back HB
119 because she deemed it to be a straight-forward piece of
legislation. She indicated that now that she has more insight
into what is taking place with the permitting process, she
thinks it is something that warrants further discussion.
4:54:05 PM
CHAIR CARRICK noted that she appreciated the discussions and
concurred that it would be better for the entirety of the state
to have inexpensive energy. After ascertaining that there was
no additional committee questions, she announced that HB 119 was
held over.