04/18/2005 01:00 PM House RESOURCES
| Audio | Topic | 
|---|---|
| Start | |
| Overview: Alaska Oil and Gas Conservation Commission | |
| HCR7 | |
| HB9 | |
| Adjourn | 
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HCR 7 | TELECONFERENCED | |
| + | HB 9 | TELECONFERENCED | |
| + | HB 241 | TELECONFERENCED | |
| + | TELECONFERENCED | 
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                         April 18, 2005                                                                                         
                           1:16 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Jay Ramras, Co-Chair                                                                                             
Representative Ralph Samuels, Co-Chair                                                                                          
Representative Jim Elkins                                                                                                       
Representative Carl Gatto                                                                                                       
Representative Kurt Olson                                                                                                       
Representative Paul Seaton                                                                                                      
Representative Harry Crawford                                                                                                   
Representative Mary Kapsner                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Gabrielle LeDoux                                                                                                 
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                              
OVERVIEW: ALASKA  OIL AND GAS  CONSERVATION COMMISSION  REVIEW OF                                                               
COMMISSIONERS DANIEL SEAMOUNT AND CATHY FOERSTER                                                                                
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
HOUSE CONCURRENT RESOLUTION NO. 7                                                                                               
Urging  the governor  to  direct  the division  of  oil and  gas,                                                               
Department  of Natural  Resources, to  undertake a  comprehensive                                                               
review  of  the  subject  of  Cook Inlet  oil  and  gas  platform                                                               
abandonment  for  the  purpose  of developing  new  oil  and  gas                                                               
platform   abandonment  regulations   and   their  adoption   and                                                               
implementation.                                                                                                                 
                                                                                                                                
     - MOVED CSHCR 7(RES) OUT OF COMMITTEE                                                                                      
                                                                                                                                
HOUSE BILL NO. 9                                                                                                                
"An  Act  establishing the  Hydrogen  Energy  Partnership in  the                                                               
Department  of  Commerce,  Community, and  Economic  Development;                                                               
requiring the  commissioner of commerce, community,  and economic                                                               
development  to   seek  public   and  private  funding   for  the                                                               
partnership; providing for the contingent  repeal of an effective                                                               
date; and providing for an effective date."                                                                                     
                                                                                                                                
     - MOVED HB 9 OUT OF COMMITTEE                                                                                              
                                                                                                                                
                                                                                                                                
HOUSE BILL NO. 241                                                                                                              
"An Act relating to participation in matters before the Board of                                                                
Fisheries by members of the board; and providing for an                                                                         
effective date."                                                                                                                
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HCR  7                                                                                                                  
SHORT TITLE: COOK INLET OIL & GAS PLATFORM ABANDONMENT                                                                          
SPONSOR(S): REPRESENTATIVE(S) OLSON                                                                                             
                                                                                                                                
04/07/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/07/05       (H)       RES                                                                                                    
04/18/05       (H)       RES AT 1:00 PM CAPITOL 124                                                                             
                                                                                                                                
BILL: HB   9                                                                                                                  
SHORT TITLE: HYDROGEN ENERGY RESEARCH PROGRAM                                                                                   
SPONSOR(S): REPRESENTATIVE(S) CRAWFORD                                                                                          
                                                                                                                                
01/10/05       (H)       PREFILE RELEASED 12/30/04                                                                              
01/10/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/10/05       (H)       CRA, RES, FIN                                                                                          
04/12/05       (H)       CRA RPT 1DP 5NR                                                                                        
04/12/05       (H)       DP: CISSNA;                                                                                            
04/12/05       (H)       NR: LEDOUX, SALMON, NEUMAN, OLSON,                                                                     
                         THOMAS                                                                                                 
04/12/05       (H)       CRA AT 8:00 AM CAPITOL 124                                                                             
04/12/05       (H)       Moved Out of Committee                                                                                 
04/12/05       (H)       MINUTE(CRA)                                                                                            
04/18/05       (H)       RES AT 1:00 PM CAPITOL 124                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
DANIEL SEAMOUNT, Commissioner                                                                                                   
Alaska Oil and Gas Conservation Commission (AOGCC)                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Explained his role at the Alaska Oil and Gas                                                                
Conservation Commission.                                                                                                        
                                                                                                                                
CATHY FOERSTER, Commissioner                                                                                                    
Alaska Oil and Gas Conservation Commission                                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Explained her role at the Alaska Oil and Gas                                                                
Conservation Commission.                                                                                                        
                                                                                                                                
ELEANOR WOLFE, Staff                                                                                                            
to Representative Kurt Olson                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Presented HCR 7 on behalf of Representative                                                                 
Olson, sponsor.                                                                                                                 
                                                                                                                                
MARK MYERS, Director                                                                                                            
Division of Oil and Gas                                                                                                         
Department of Natural Resources (DNR)                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Answered questions regarding HCR 7.                                                                         
                                                                                                                                
MICHAEL MUNGER, Executive Director                                                                                              
Cook Inlet Regional Citizens Advisory Council                                                                                   
Kenai, Alaska                                                                                                                   
POSITION STATEMENT: Testified on HCR 7.                                                                                         
                                                                                                                                
PAUL MORGAN, Energy Manager                                                                                                     
Golden Valley Electric Association                                                                                              
Alternative Energy Team                                                                                                         
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of HB 9.                                                                               
                                                                                                                                
BILL LEIGHTY                                                                                                                    
Alaska Applied Science, Inc.                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified on HB 9.                                                                                          
                                                                                                                                
SARA FISHER-GOAD                                                                                                                
Alaska Energy Authority                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Answered questions about HB 9.                                                                              
                                                                                                                                
CHRIS ROSE, Executive Director                                                                                                  
Renewable Energy Alaska Project (REAP)                                                                                          
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of HB 9.                                                                               
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CO-CHAIR  RALPH  SAMUELS  called  the  House  Resources  Standing                                                             
Committee  meeting  to  order at  1:16:23  PM.    Representatives                                                             
Seaton, Samuels, Ramras, Olson,  Gatto, and Crawford were present                                                               
at  the  call  to  order.   Representatives  Elkins  and  Kapsner                                                               
arrived as the meeting was in progress.                                                                                         
                                                                                                                                
^OVERVIEW: Alaska Oil and Gas Conservation Commission                                                                         
                                                                                                                                
CO-CHAIR  SAMUELS  announced that  the  first  order of  business                                                               
would  be  an review  of  two  Alaska  Oil and  Gas  Conservation                                                               
Commission (AOGCC) members for upcoming confirmation hearings.                                                                  
                                                                                                                                
DANIEL SEAMOUNT,  Commissioner, Alaska  Oil and  Gas Conservation                                                               
Commission, said he has been  a commissioner in the geologic seat                                                               
since 2000, and the job has  been interesting and satisfying.  He                                                               
said he is  addicted to the excitement of the  work, and he would                                                               
like to  continue working  for the  people of  Alaska.   Much has                                                               
been accomplished, but it has been a team effort, he said.                                                                      
                                                                                                                                
1:18:21 PM                                                                                                                    
                                                                                                                                
MR. SEAMOUNT said  there are upcoming issues  like the mitigation                                                               
of oil losses due  to major gas sales on the  North Slope and the                                                               
expanded exploration in the National  Petroleum Reserve.  He said                                                               
the  AOGCC  has  streamlined  the  permitting  process  for  well                                                               
permits from 28 days to 5 days.                                                                                                 
                                                                                                                                
1:19:53 PM                                                                                                                    
                                                                                                                                
MR. SEAMOUNT  stated that the  commission is looking for  ways to                                                               
cut costs, and there will be a budget in the near future.                                                                       
                                                                                                                                
1:20:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO asked about well logs being confidential.                                                                  
                                                                                                                                
MR. SEAMOUNT  said well logs  are generally confidential  for two                                                               
years.    DNR must  approve  if  a  company  wants to  keep  them                                                               
confidential for a  longer period.  The  Arctic National Wildlife                                                               
Refuge well  is the most  valuable log information in  the world,                                                               
and it has been hidden in a vault since 1986.                                                                                   
                                                                                                                                
1:21:47 PM                                                                                                                    
                                                                                                                                
CO-CHAIR RAMRAS asked about future of Cook Inlet exploitation.                                                                  
                                                                                                                                
MR. SEAMOUNT said he has worked  as a geologist in Cook Inlet and                                                               
believes  there is  a tremendous  amount  of oil  potential.   He                                                               
declared that only four percent of the oil has been found.                                                                      
                                                                                                                                
1:23:15 PM                                                                                                                    
                                                                                                                                
CATHY  FOERSTER, Commissioner,  Alaska Oil  and Gas  Conservation                                                               
Commission, said she was a  petroleum engineer with experience in                                                               
reservoir development  and facility  design.  She  has supervised                                                               
and managed small technical engineering  groups and large laborer                                                               
operations.  She worked in Texas,  Louisiana, and 13 years on the                                                               
North   Slope   as   an   operations   manager   and   production                                                               
superintendent  at   Prudhoe  Bay.     She   managed  technically                                                               
brilliant people, led  a strategic business review, and  was on a                                                               
consulting team to report to  the Department of Natural Resources                                                               
on how Alaska can assist new operators on the North Slope.                                                                      
                                                                                                                                
1:26:38 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER noted  that it  was an  honor to  work with  such a                                                               
well-respected commission with ethical, hardworking people.                                                                     
                                                                                                                                
1:27:06 PM                                                                                                                    
                                                                                                                                
CO-CHAIR RAMRAS asked about the future of viscous oil.                                                                          
                                                                                                                                
MS. FOERSTER said,  optimistically, there is a long  future.  The                                                               
hurdle is that North Slope  facilities are producing beyond their                                                               
original design length.  There  are trillions of barrels of heavy                                                               
resource  that is  accessible,  she said,  but  facility life  is                                                               
working  against it.   She  said independents  are coming  in and                                                               
scraping the pots and extending production on the North Slope.                                                                  
                                                                                                                                
1:29:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO noted that producing  gas on the North Slope                                                               
will reduce  oil production, and  he asked  if there will  be new                                                               
technology to pull the oil out of the ground.                                                                                   
                                                                                                                                
MS. FOERSTER said  the optimal way to  blow down a gas  cap is to                                                               
wait until all oil is gone,  but the market might not allow that.                                                               
Operators will  likely be producing  gas before the oil  is gone,                                                               
but  there  are   ways  to  encourage  them   to  accelerate  oil                                                               
production.                                                                                                                     
                                                                                                                                
1:31:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO  suggested it could take  thousands of years                                                               
to get  out the last few  drops of oil.   At what point  will the                                                               
gas be  worth the loss of  oil, and is there  technology to allow                                                               
the oil to be recovered after the gas is gone? he asked.                                                                        
                                                                                                                                
1:32:12 PM                                                                                                                    
                                                                                                                                
MS.  FOERSTER  said,  "We  want  to  maximize  total  hydrocarbon                                                               
recovery."  As the gas cap  is depleted, the oil moves into rocks                                                               
and is  more difficult  to remove.   Reservoir pressure  is lost,                                                               
and with the pressure gone the oil can't be recovered.                                                                          
                                                                                                                                
1:33:57 PM                                                                                                                    
                                                                                                                                
CO-CHAIR RAMRAS asked what is the AOGCC's mission.                                                                              
                                                                                                                                
MS. FOERSTER  said the commission's  mission is to  prevent waste                                                               
of   hydrocarbons,   encourage    maximum   production,   protect                                                               
groundwater, and to protect the rights of the landowners.                                                                       
                                                                                                                                
1:34:50 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SAMUELS asked  about the different oil  fields in Alaska                                                               
in relation to the North Slope.                                                                                                 
                                                                                                                                
MS. FOERSTER  said most  everything is  underground, so  the same                                                               
physics apply.  "A reservoir is a reservoir," she said.                                                                         
                                                                                                                                
The committee took an at-ease from 1:36 PM to 1:37 p.m.                                                                       
                                                                                                                                
HCR  7-COOK INLET OIL & GAS PLATFORM ABANDONMENT                                                                              
                                                                                                                                
CO-CHAIR SAMUELS announced that the  next order of business would                                                               
be HOUSE  CONCURRENT RESOLUTION  NO. 7,   Urging the  governor to                                                               
direct  the  division  of  oil and  gas,  Department  of  Natural                                                               
Resources, to undertake a comprehensive  review of the subject of                                                               
Cook Inlet  oil and gas  platform abandonment for the  purpose of                                                               
developing new  oil and gas platform  abandonment regulations and                                                               
their adoption and implementation.                                                                                              
                                                                                                                                
ELEANOR  WOLFE, Staff  to Representative  Kurt Olson,  said there                                                               
are offshore oil  platforms in Cook Inlet that are  over 40 years                                                               
old,  and  regulations  regarding abandoning  the  platforms  are                                                               
needed.   The  large number  of entities  involved will  make the                                                               
process time  consuming.  She  said it is imperative  the process                                                               
begins  as  soon  as   possible,  "particularly  considering  the                                                               
impending sale  of Unocal."   She said  the process  will involve                                                               
Cook  Inlet  Keeper,  Trustees  for  Alaska,  the  Department  of                                                               
Environmental  Conservation,  industry   members,  Department  of                                                               
Natural  Resources   (DNR),  Alaska  Oil  and   Gas  Conservation                                                               
Commission  (AOGCC),  and  others.   She  concluded  that  HCR  7                                                               
requests a comprehensive review be undertaken by DNR.                                                                           
                                                                                                                                
1:38:48 PM                                                                                                                    
                                                                                                                                
MARK  MYERS, Director,  Division of  Oil and  Gas, Department  of                                                               
Natural Resources (DNR), said DNR is  fine with HCR 7.  There are                                                               
16  platforms in  Cook Inlet,  and  4 are  in lighthouse  status,                                                               
meaning  the wells  have been  plugged  and abandoned.   He  said                                                               
these platforms  are not economic  for production, and  there are                                                               
others  that are  below their  peak  level of  production.   "The                                                               
ultimate  abandon standards  need  to be  addressed  in the  near                                                               
future," he stated.   "Under the current  lease terms, basically,                                                               
they're required to fully remove  and abandon all the facilities,                                                               
remove  all  the  seafloor pipelines  and  permanently  plug  and                                                               
abandon  the  wells  to  AOGCC satisfaction."    There  is  still                                                               
exploration  potential with  lower and  deeper targets,  he said.                                                               
"So the  question is, can  someone else economically  operate the                                                               
platforms or should  they be removed permanently?"   He suggested                                                               
the  platforms  could  be  totally  removed  or  left  for  other                                                               
purposes.   The state needs  a process and standards,  which will                                                               
take time, and DNR supports moving forward, he said.                                                                            
                                                                                                                                
1:41:24 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  RAMRAS asked  the  cost to  tear down  and  clean up  a                                                               
platform.                                                                                                                       
                                                                                                                                
1:41:53 PM                                                                                                                    
                                                                                                                                
MR. MYERS said  between $2 to $10 million for  just the platform,                                                               
and then  there is the pipeline.   Much of the  infrastructure is                                                               
connected and interrelated,  creating complications.  Specialized                                                               
equipment will  be needed,  and there are  questions of  what the                                                               
ultimate structure will  be, if anything.  He  said the platforms                                                               
could be used for habitat,  further exploration, fish farms or be                                                               
obliterated.                                                                                                                    
                                                                                                                                
1:43:24 PM                                                                                                                    
                                                                                                                                
CO-CHAIR RAMRAS asked the cost of a new platform in Cook Inlet.                                                                 
                                                                                                                                
MR. MYERS  said up to $20  million just for the  platform without                                                               
the rigs.                                                                                                                       
                                                                                                                                
CO-CHAIR  RAMRAS  asked how  the  state  can  help urge  the  big                                                               
operators to sell  to the independent oil  companies and overcome                                                               
the concern of increased competition.                                                                                           
                                                                                                                                
1:45:05 PM                                                                                                                    
                                                                                                                                
MR. MYERS  said Cook  Inlet does not  have enough  oil production                                                               
for export,  reducing competition.   He said the bigger  issue is                                                               
that large corporations want more  profits than the platforms are                                                               
currently  generating, and  they want  to lose  their deep-pocket                                                               
liability of  oil spills  from the  aging platforms.   "So   they                                                               
want to  go ahead and sell  the asset," he said.   Some platforms                                                               
are still  lucrative, but the  marginal platforms will  likely be                                                               
sold.   The  state will  want to  make sure  the new  operator is                                                               
capable of operating  the platform safely, and will  want to keep                                                               
the deep-pocket connection  so the state doesn't end  up with the                                                               
liability.                                                                                                                      
                                                                                                                                
1:47:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CRAWFORD   asked  how  long  the   platforms  can                                                               
withstand the inclement environment.                                                                                            
                                                                                                                                
MR. MYERS said they appear to  be adequate for 20 years, but each                                                               
platform needs to be considered individually.                                                                                   
                                                                                                                                
1:49:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTO asked  if the  platforms can  be blown  up,                                                               
with the debris left for fish habitat.                                                                                          
                                                                                                                                
MR. MYERS said  that might be permissible but it  will need to go                                                               
through the public process.   There are strong tidal currents, so                                                               
it may  not be stable.   He noted it  would go through  an Alaska                                                               
Coastal Management Program process.                                                                                             
                                                                                                                                
1:50:50 PM                                                                                                                    
                                                                                                                                
MICHAEL MUNGER, Executive Director,  Cook Inlet Regional Citizens                                                               
Advisory  Council,  Kenai,  said   the  council  is  a  nonprofit                                                               
organized  exclusively for  the oversight  and monitoring  of oil                                                               
operations in  Cook Inlet.  The  council took a detailed  look at                                                               
the dismantling  of the platforms,  and said DNR has  no specific                                                               
statutes  or regulations  for such.   He  said HCR  7 will  allow                                                               
regulators to  develop regulations, and  the council has  a white                                                               
paper on it that will be ready in May.                                                                                          
                                                                                                                                
1:53:03 PM                                                                                                                    
                                                                                                                                
DANIEL SEAMOUNT,  Commissioner, Alaska  Oil and  Gas Conservation                                                               
Commission (AOGCC), said  the AOGCC supports HCR 7,  but he urged                                                               
caution "because  there is  a lot  of oil  left under  Cook Inlet                                                               
that  is accessible  from these  platforms."   Some  light-housed                                                               
platforms have  only recovered  30 percent of  the oil,  he said.                                                               
"There are hundreds  of millions of barrels left  in the produced                                                               
fields  of  Cook  Inlet,"  he  noted,  and  motivated  production                                                               
companies should be  encouraged to use new  technology to extract                                                               
as much oil as reachable from the platforms.                                                                                    
                                                                                                                                
1:55:05 PM                                                                                                                    
                                                                                                                                
MR. SEAMOUNT said  Cook Inlet is regarded as a  mature field, but                                                               
it is  still under-explored.   He  noted a  study that  said only                                                               
four percent  of the oil  has been  identified in Cook  Inlet, so                                                               
with  the 3  billion  barrels that  have  been identified,  "that                                                               
comes out  to 75 billion barrels  of oil that was  generated, and                                                               
no one knows where  it went.  It may have  escaped to the surface                                                               
or there may  be a lot of it left  in undiscovered reservoirs and                                                               
undiscovered rocks."   He said  his experience tells him  that it                                                               
is still  trapped somewhere, and  a lot would be  accessible from                                                               
the platforms.                                                                                                                  
                                                                                                                                
1:56:53 PM                                                                                                                    
                                                                                                                                
MR. SEAMOUNT said the source rocks  may be in the Jurassic layer.                                                               
It  makes sense  to reenter  well bores  and drill  another 5,000                                                               
feet into that  section.  He noted that the  rocks are folded and                                                               
faulted,  making seismic  identification difficult,  so the  best                                                               
way to test the potential is through old well bores.                                                                            
                                                                                                                                
1:57:45 PM                                                                                                                    
                                                                                                                                
MR. SEAMOUNT  said, "There  are four tiers  of potential  left in                                                               
Cook Inlet.   One is discovered reservoirs that  have been under-                                                               
produced--less  than 30  percent  recovery.   There are  untested                                                               
fault  blocks   that  separate  the  known   reservoir  from  its                                                               
equivalent under  and off to the  sides of the platforms.   There                                                               
are identified prospects that have  been around for years but not                                                               
tested.    And then  there's  the  deep Jurassic  and  Cretaceous                                                               
potential."  The AOGCC believes  the platforms are assets and all                                                               
stakeholders must be careful  when considering abandonment, which                                                               
closes a window of economic potential, he concluded.                                                                            
                                                                                                                                
1:59:03 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SAMUELS asked  if AOGCC  has  the ability  to tell  the                                                               
difference between  a true exploratory  well and a well  going to                                                               
an  under-produced area  that would  be  considered a  production                                                               
well.                                                                                                                           
                                                                                                                                
MR. SEAMOUNT said  there is the expertise  to accurately separate                                                               
them out anywhere in Alaska.                                                                                                    
                                                                                                                                
REPRESENTATIVE CRAWFORD asked about gas in Cook Inlet.                                                                          
                                                                                                                                
MR. SEAMOUNT said he believes  there is gas potential, especially                                                               
at  depth.   "In fact  the gas  oil ratio  is fairly  low in  the                                                               
presently produced reservoir, so where is that gas?" he asked.                                                                  
                                                                                                                                
2:00:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE OLSON offered  Amendment 1, labeled 24-LS0876\A.1,                                                               
Chenoweth, 4/12/05 as follows:                                                                                                  
                                                                                                                                
     1    Page 2, line 6:                                                                                                       
     2         Delete "smaller"                                                                                                 
     3         Insert "growing, independent"                                                                                    
                                                                                                                                
There being no objection, Amendment 1 carried.                                                                                  
                                                                                                                                
REPRESENTATIVE  OLSON moved  to report  HCR 7  as amended  out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal notes.                                                                                                                   
                                                                                                                                
There being no  objection, CSHCR 7 (RES) passed out  of the House                                                               
Resources Standing Committee.                                                                                                   
                                                                                                                                
The committee took an at-ease from 2:01 p.m. to 2:02.                                                                           
                                                                                                                                
2:02:40 PM                                                                                                                    
HB   9-HYDROGEN ENERGY RESEARCH PROGRAM                                                                                       
                                                                                                                                
CO-CHAIR RAMRAS announced that the  final order of business would                                                               
be  HOUSE BILL  NO. 9  "An Act  establishing the  Hydrogen Energy                                                               
Partnership  in  the  Department   of  Commerce,  Community,  and                                                               
Economic  Development; requiring  the  commissioner of  commerce,                                                               
community, and  economic development  to seek public  and private                                                               
funding for the partnership; providing  for the contingent repeal                                                               
of an effective date; and providing for an effective date."                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD  said a  similar bill  has passed  out of                                                               
the House in  a prior session, and HB 9  creates a repository for                                                               
grant  money  for  hydrogen research  and  development  projects.                                                               
Hydrogen can  be our next Prudhoe  Bay, he said, because  it is a                                                               
medium for storage and movement  of alternative energy, including                                                               
tidal, wind, and geothermal power.                                                                                              
                                                                                                                                
2:04:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CRAWFORD said,  "We believe that it's  the fuel of                                                               
the future."                                                                                                                    
                                                                                                                                
CO-CHAIR  RAMRAS  said the  fiscal  note  indicates that  federal                                                               
funds would be found, and if  they were not available, HB 9 would                                                               
be repealed.  He asked what provisions would be repealed.                                                                       
                                                                                                                                
REPRESENTATIVE CRAWFORD  said the project will  not spend general                                                               
funds.  If there is no grant money, it will go away, he said.                                                                   
                                                                                                                                
2:05:55 PM                                                                                                                    
                                                                                                                                
PAUL MORGAN, Energy Manager,  Golden Valley Electric Association,                                                               
Alternative  Energy  Team,  Fairbanks,  said  hydrogen  has  huge                                                               
potential  as  Alaska's  energy   future  and  as  an  exportable                                                               
technology.   Golden Valley feels that  HB 9 is a  good idea, and                                                               
notes  that it  is supported  by  the Alaska  Energy Policy  Task                                                               
Force.   He said hydrogen  has a low  freezing point so  it would                                                               
work nicely in Fairbanks.                                                                                                       
                                                                                                                                
REPRESENTATIVE CRAWFORD showed  a small gizmo with  a fan running                                                               
on a photovoltaic  panel which turns water into  hydrogen, and he                                                               
said as long as  the sun is shining, the wind  is blowing, or the                                                               
water is running, it will be in perpetual motion.                                                                               
                                                                                                                                
2:08:22 PM                                                                                                                    
                                                                                                                                
BILL LEIGHTY,  Alaska Applied  Science, Inc.,  said the  gizmo is                                                               
not  perpetual motion,  but  it  is hydrogen  stored  in a  small                                                               
pipeline.   Hydrogen  is  not  an energy  source,  and an  energy                                                               
source is  needed to make  the hydrogen,  he explained.   He said                                                               
Alaska's  niche  in  the  emerging  hydrogen  sustainable  energy                                                               
sector  is  that we  may  have  opportunities to  bring  Alaska's                                                               
resources, both  fossil and  renewable, to  distant markets  by a                                                               
pipeline or  other means of  compressing or  liquefying hydrogen.                                                               
"We may also be able to  demonstrate ... storage of hydrogen at a                                                               
large  scale, either  in  geologic formations  or  in very  large                                                               
tanks filled with  the abundant zeolites that we  have as mineral                                                               
resources  here  in the  state."    He  noted that  villages  are                                                               
functionally  islands,   and  he  said  research   in  Norway  is                                                               
demonstrating  the  interface  between wind  power,  hydrogen  to                                                               
store the  energy, and  then various ways  of converting  it back                                                               
into  electricity as  it's  needed."   He said  that  HB 9  would                                                               
facilitate a  partnership and offer  opportunities for  Alaska to                                                               
serve  as  a  research  and   production  location  for  the  new                                                               
technology.   He cautioned that  HB 9  shouldn't be looked  at as                                                               
just a way  to garner federal funds to support  something that is                                                               
just  within  Alaska.     The  state  should   partner  with  the                                                               
Department of Energy.                                                                                                           
                                                                                                                                
2:11:17 PM                                                                                                                    
                                                                                                                                
MR. LEIGHTY said Canada, the  U.S. Department of Energy, and some                                                               
states have made hydrogen road maps,  and Alaska might do this to                                                               
see  what  its  strategic  advantage   is.    He  cautioned  that                                                               
transmission and storage of hydrogen  is difficult and expensive,                                                               
because of its low energy density.                                                                                              
                                                                                                                                
2:12:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTO said  the  premise is  that  the amount  of                                                               
energy from the  sun, wind, or water is greater  than what can be                                                               
turned into hydrogen, so why make it, he asked.                                                                                 
                                                                                                                                
MR. LEIGHTY said  energy should be used in the  form that is most                                                               
convenient at the  site where the energy is made,  but Alaska has                                                               
more abundant resources  than it can use in  a particular locale,                                                               
and others  need the energy,  so it  might be possible  to export                                                               
stranded renewable resources  as hydrogen.  Any  time you convert                                                               
energy you lose energy, he said.                                                                                                
                                                                                                                                
2:14:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO  said he read  that hydrogen cars  lose fuel                                                               
sitting still.                                                                                                                  
                                                                                                                                
MR. LEIGHTY explained that most  car manufacturers have abandoned                                                               
the technology of  liquid hydrogen, which is lost as  a gas.  The                                                               
high-pressure hydrogen  stored in  carbon filament  wound gaseous                                                               
containers will not lose energy, he said.                                                                                       
                                                                                                                                
2:16:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON asked about  new solid-state technology not                                                               
at high pressure.                                                                                                               
                                                                                                                                
MR.  LEIGHTY said  that is  applicable for  vehicles.   The solid                                                               
form is more  attractive because of less pressure, but  it is not                                                               
yet competitive with the high-pressure technology, he added.                                                                    
                                                                                                                                
2:18:02 PM                                                                                                                    
                                                                                                                                
SARA FISHER-GOAD,  Alaska Energy Authority, said  the fiscal note                                                               
for HB  9 requires  receipt authority  through the  Department of                                                               
Commerce  to get  the program  started.   The plan  is to  hire a                                                               
person to  staff the  partnership and  apply for  federal grants.                                                               
She does not see  how HB 9 will be a burden  on the general fund;                                                               
the money  would come from  a utility  or private funder.   There                                                               
are  conditional  effective dates  that  repeal  the act  if  the                                                               
federal money doesn't pan out, she said.                                                                                        
                                                                                                                                
2:20:16 PM                                                                                                                    
                                                                                                                                
CHRIS ROSE,  Executive Director, Renewable Energy  Alaska Project                                                               
(REAP),  said   REAP  is  a   coalition  of   utility  companies,                                                               
environmental  groups,   consumer  groups,  and   businesses  who                                                               
promote  renewable energy.   The  group supports  the bill  for a                                                               
number  of  reasons,  he  said.   He  noted  that  everyone  uses                                                               
hydrogen in other forms, such as  wood, coal, or any fossil fuel.                                                               
The society  is moving toward a  pure form of hydrogen,  which is                                                               
clean.   There  are questions  about storage  and transportation,                                                               
and  this  is   one  area  where  Alaska  can   do  research  and                                                               
development, he  suggested.  He  said there are many  stand alone                                                               
villages in  Alaska that can  generate their own  hydrogen rather                                                               
than importing expensive  diesel, he said.  He  concluded that HB
9 could be the beginning of a hydrogen road map for Alaska.                                                                     
                                                                                                                                
2:22:55 PM                                                                                                                    
                                                                                                                                
MR. ROSE  said Alaska  has many energy  resources.   The Aleutian                                                               
Islands probably  have 99 percent of  the class 7 winds  in North                                                               
America, and anything  class 4 and above  is commercially viable.                                                               
He also  mentioned Alaska's geothermal  energy as a  resource for                                                               
making hydrogen fuel.                                                                                                           
                                                                                                                                
REPRESENTATIVE  CRAWFORD cited  an  idea of  a hydrogen  pipeline                                                               
from the  Aleutians to Japan  with wind generators along  the way                                                               
to fill the pipeline.                                                                                                           
                                                                                                                                
2:24:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO  said the fiscal  note looks like  the state                                                               
is spending about $250,000 from three different departments.                                                                    
                                                                                                                                
REPRESENTATIVE CRAWFORD  said they're not additive,  "its all the                                                               
same one  and it's program-receipts  related.  If they  don't get                                                               
the money from  the grants to start this project,  it doesn't get                                                               
started.  There's no general fund money going to it."                                                                           
                                                                                                                                
2:25:39 PM                                                                                                                    
                                                                                                                                
MS. FISHER-GOAD said, "This is  a Department of Commerce program,                                                               
and commerce  has requested that  the Alaska Energy  Authority be                                                               
the point  agency."  The first  fiscal note from commerce  is the                                                               
intake of  the statutory designated  program receipts,  and those                                                               
would be  from a private  entity.  The  second fiscal note  is to                                                               
the Alaska  Energy Authority, which is  interagency receipts from                                                               
the Department  of Commerce.   The  third fiscal  note recognizes                                                               
that the Alaska Industrial Development  and Energy Authority does                                                               
not  have staff,  so  by requiring  a person,  a  fiscal note  is                                                               
required.   The fiscal notes are  just a way for  the legislature                                                               
to  see how  money would  flow, and  it is  not from  the general                                                               
fund.                                                                                                                           
                                                                                                                                
2:27:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO asked who is going to cough up the money.                                                                  
                                                                                                                                
MS. FISHER-GOAD said there are potential private sources.                                                                       
                                                                                                                                
2:28:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ELKINS  said if  the money  doesn't appear  it may                                                               
become a burden on the general fund.   He asked if the state will                                                               
get money if the project is successful.                                                                                         
                                                                                                                                
MS. FISHER-GOAD explained that if  the funding isn't secured with                                                               
federal or private sources the  partnership will be repealed, and                                                               
there will be no drain on the general fund at all.                                                                              
                                                                                                                                
2:29:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ELKINS   finds  it  hard  to   believe  that  the                                                               
legislature  wouldn't get  asked for  money if  the grants  don't                                                               
happen.                                                                                                                         
                                                                                                                                
MS. FISHER GOAD said the way  the bill is structured, she doesn't                                                               
see where AEA would request money from the general fund.                                                                        
                                                                                                                                
REPRESENTATIVE SEATON  explained that another bill  would have to                                                               
offered,  and the  current legislature  can't  put conditions  on                                                               
future legislation to block hydrogen research.                                                                                  
                                                                                                                                
2:31:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CRAWFORD said  it is not the intent  to burden the                                                               
general fund; repealers are built in.   "I don't know how to make                                                               
it any  clearer."   It would  take a separate  bill to  ever fund                                                               
this partnership, he said.                                                                                                      
                                                                                                                                
2:31:56 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  RAMRAS  noted  that  HB   9  will  go  to  the  finance                                                               
committee.                                                                                                                      
                                                                                                                                
REPRESENTATIVE GATTO  said that  members of the  partnership will                                                               
serve without  compensation, but they are  authorized for travel.                                                               
He  wants to  know where  the  money is  coming from,  and he  is                                                               
concerned  about paying  benefits.   He  said he  didn't want  to                                                               
support a bill that spent money or hired new employees.                                                                         
                                                                                                                                
2:33:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CRAWFORD said it is  private money, and members of                                                               
the board are not part of any retirement system.                                                                                
                                                                                                                                
REPRESENTATIVE  KAPSNER  said  she  served on  boards  and  never                                                               
received PERS.                                                                                                                  
                                                                                                                                
2:34:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON said typical  boards and commissions do not                                                               
qualify for retirement benefits.                                                                                                
                                                                                                                                
REPRESENTATIVE  KAPSNER said  the $95,000  is not  coming out  of                                                               
general  funds, and  it is  a  good case  of spend  now and  save                                                               
later.  She  noted that the state spends an  exorbitant amount on                                                               
subsidizing rural  Alaska's diesel  fuel.   She pointed  out that                                                               
the  legislature is  willing to  appropriate  a lot  of money  to                                                               
Arctic Power to just lobby  to drill the Arctic National Wildlife                                                               
Refuge.  "This pales  to the money given to them,"  she said.  We                                                               
do a  lot of lip  service to  alternative energy, she  noted, and                                                               
this is a step in the right direction.                                                                                          
                                                                                                                                
2:36:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   ELKINS    will   support   the    bill   because                                                               
Representative Crawford  introduced it,  but he  wants it  on the                                                               
record that, "Once we're hooked, we're hooked."                                                                                 
                                                                                                                                
REPRESENTATIVE GATTO asked how per diem and travel will be paid.                                                                
                                                                                                                                
REPRESENTATIVE  CRAWFORD said  if  the  railbelt utilities  don't                                                               
pitch in,  it will not  get off the ground.   The program  has to                                                               
find  the money  first,  and  the state  is  only  hooked if  the                                                               
legislature  passes   another  bill.    This   same  bill  passed                                                               
unanimously twice last year, he noted.                                                                                          
                                                                                                                                
2:37:32 PM                                                                                                                    
                                                                                                                                
CO-CHAIR RAMRAS said he is a big fan of alternative energy.                                                                     
                                                                                                                                
REPRESENTATIVE SEATON moved to report  HB 9 out of committee with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
There being no objection, HB 9 was passed out of committee.                                                                     
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Resources  Standing Committee  meeting was  adjourned at  2:39:21                                                             
PM.                                                                                                                           
                                                                                                                                
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