Legislature(2025 - 2026)BUTROVICH 205
04/07/2025 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| SB114 | |
| Presentation: Pegasus Update: Megaproject Considerations | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 114 | TELECONFERENCED | |
SB 114-GAS PIPELINE FAIRBANKS SPUR
3:31:13 PM
CHAIR GIESSEL announced the consideration of SENATE BILL NO. 114
"An Act relating to an in-state natural gas pipeline developed
by the Alaska Gasline Development Corporation; and providing for
an effective date."
3:31:33 PM
SENATOR MIKE CRONK, District R, Alaska State Legislature,
Juneau, Alaska, introduced himself.
3:31:46 PM
PAUL MENKE, Staff, Senator Mike Cronk, Alaska State Legislature,
Juneau, Alaska, introduced himself.
3:31:50 PM
SENATOR CRONK paraphrased the sponsor statement for SB 114:
[Original punctuation provided.]
Sponsor Statement for SB 114
"An Act relating to an in-state natural gas pipeline
developed by the Alaska Gasline Development
Corporation; and providing for an effective date."
The Alaska Gasline Development Corporation (AGDC) was
established in 2010 with the passage of HB 369 in the
26th Legislature. HB 369 included language that
stated, "the state's significant reserves of natural
gas should be made available on a priority basis in
the state to enhance employment opportunities, expand
the state's economy, and supply a significant portion
of community energy needs."
The near- 100,000 people in the Fairbanks North Star
Borough pay the highest electricity rates on the
Railbelt, according to a report published by the
University of Alaska Fairbanks Alaska Center for
Energy and Power. If a spur to Fairbanks is not built,
the citizens of the Golden Heart City will continue to
pay exorbitant electricity costs.
Businesses and citizens living in Alaska's 2nd most
populous city and the entire Fairbanks North Star
Borough desperately need the energy relief that would
come from a spur connected to a natural gas pipeline.
The AGDC maintains that the development of a spur line
to Fairbanks and 34 other identified communities,
although technically feasible, would need to be
evaluated prior to construction.
SB 114 guarantees that an in-state pipeline would
include a spur to the City of Fairbanks and the
Fairbanks North Star Borough and ensures that all
Alaskans can benefit from a natural gas pipeline.
SENATOR CRONK paraphrased the sectional analysis for SB 114:
[Original punctuation provided.]
Sectional Analysis for SB 114
"An Act relating to an in-state natural gas pipeline
developed by the Alaska Gasline Development
Corporation; and providing for an effective date."
Section 1: Amends AS 31.25.005(4) to establish a
requirement for the Alaska Gasline Development
Corporation to include a direct spur line to the City
of Fairbanks and the Fairbanks North Star Borough in
the construction of an in-state natural gas pipeline.
Section 2: Establishes an immediate effective date.
3:32:52 PM
CHAIR GIESSEL noted the zero fiscal note from the Department of
Commerce, Community and Economic Development (DCCED), OMB
Component Number 2986, dated March 14, 2025. She also noted two
documents available for review, including the Alaska Gasline
Development Corporation (AGDC) Fact Sheet, the Spatial Energy
Burden Analysis of the Fairbanks North Star Borough by the
Alaska Center for Energy and Power (ACEP), and two Alaska
liquified Natural Gas (LNG) project maps.
3:33:48 PM
SENATOR HUGHES expressed support for this project; however, she
surmised that the project would require funding. She directed
attention to the fiscal note from the Department of Commerce,
Community and Economic Development (DCCED), OMB Component Number
2986, dated March 14, 2025, which states that SB 114 would not
have a fiscal impact on AGDC or the construction of the Alaska
Liquified Natural Gas Project. She asked about funding sources
for the Fairbanks spur line project.
3:33:54 PM
SENATOR DUNBAR joined the meeting.
3:34:20 PM
MR. MENKE explained that SB 114 applies to the in-state gasline
portion of the project that ended in 2019. He said the recent
announcement from AGDC is for an export line. He shared a recent
cost estimate of $150-$200 million. He expressed hope that
federal receipts would pay the bulk of the cost and noted
federal support. He deferred to AGDC for additional information.
3:35:43 PM
FRANK RICHARDS, President, Alaska Gasline Development
Corporation (AGDC), Anchorage, Alaska, asked to hear the
question again.
3:35:55 PM
SENATOR HUGHES said that the Fairbanks spur line is estimated to
cost $150-$200 million; however, this is not reflected in the
DCCED fiscal note for SB 114. She wondered how the project would
be financed. She asked if this cost would be included as part of
the Alaska LNG project and would thus become part of the
financing put forward by Glenfarne.
3:36:21 PM
MR. RICHARDS clarified that the most recent cost estimate for
the Fairbanks spur line is $180-$200 million. This cost is all-
inclusive with contingency. He stated that it would be a 32-mile
pipeline and briefly described its location. He explained that
the Alaska LNG project does not include the Fairbanks spur line.
He said the Fairbanks spur line was designed as part of the
Alaska Stand Alone Pipeline (ASAP) at the request of the State
of Alaska. He briefly described the engineering design process,
which provided the necessary spur line construction permits from
the Department of Natural Resources (DNR). He reiterated that
this was designed under the Alaska Stand Alone Pipeline (ASAP)
project and is separate from the Alaska LNG project. With
respect to using federal receipts to pay for the spur line, he
indicated that this would be welcome. He said AGDC recently
signed a memorandum of understanding with an Alaskan pipeline
owner/operator to take on the development of the Fairbanks spur
line. He shared how AGDC would work with that developer by
providing access to the permits, etc., and the developer would
bear the costs to complete the project.
3:37:05 PM
SENATOR CLAMAN joined the meeting.
3:38:23 PM
SENATOR HUGHES asked Mr. Richards to repeat his comment
regarding the possibility of using federal receipts to help fund
the spur line.
3:38:36 PM
MR. RICHARDS said he was not aware of a request to the federal
administration to cover the cost of the Fairbanks spur line.
3:38:51 PM
SENATOR HUGHES asked whether a private company would build [the
spur line] and charge a tariff to pay for the project.
3:39:01 PM
MR. RICHARDS confirmed this understanding and said the process
would be similar to pipeline expansions in southcentral Alaska.
He briefly described that process.
3:39:26 PM
SENATOR HUGHES asked whether Mr. Richards could share the name
of the company.
3:39:38 PM
MR. RICHARDS said the company asked that its name remain
confidential. However, he noted recent discussions between the
company and delegates from Fairbanks. He said AGDC is waiting
for the company's approval to share its identity.
3:39:57 PM
SENATOR WIELECHOWSKI joined the meeting.
3:40:06 PM
SENATOR KAWASAKI commented that the Legislature has discussed
many LNG plans over the years. He pointed out that the initial
cost estimate for ASAP was close to $1 billion and asked why the
current estimate is less.
3:40:49 PM
MR. RICHARDS said the Alaska Legislature previously directed
AGDC to evaluate the opportunity to develop an in-state LNG
pipeline that would include a spur line into Fairbanks (the
Stand Alone Pipeline project). Once AGDC completed the front-end
engineering and design process, the overall project cost was an
estimated $10 billion. This included a $7 billion pipeline, of
which the Fairbanks spur line was a part. He explained that at
that time the estimated cost of the Fairbanks spur line was $150
million (including contingency).
3:41:53 PM
SENATOR KAWASAKI asked about the tariff for Fairbanks residents
for a $200 million spur line, assuming the LNG needs of those
residents remains the same.
3:42:20 PM
MR. RICHARDS said the ASAP spur line was designed to accommodate
current and future needs of Fairbanks residents. He estimated
the tariff (for existing volumes) would be $1.20-$1.40. He said
he would provide the most recent economic evaluation to the
committee.
3:42:56 PM
SENATOR MYERS directed attention to the Wood McKenzie Study and
asked about the estimated gas usage of Fairbanks residents in
that study.
3:43:16 PM
MR. RICHARDS said he would need to review the report to supply
the number.
3:43:35 PM
SENATOR MYERS shared his understanding that the Wood Mackenzie
study estimated 11 billion cubic feet (bcf)/year into Fairbanks;
however, Fairbanks currently uses 1.5 bcf/year. He emphasized
the difference between the two. He offered a hypothetical
situation and asked about the impact this would have on the
price of the gas in Fairbanks and Southcentral Alaska.
3:44:16 PM
MR. RICHARDS said he would need to run this through ADGC's
economic model to provide accurate data.
3:44:27 PM
CHAIR GIESSEL opened public testimony on SB 114.
3:44:58 PM
JOMO STEWART, President, Fairbanks Economic Development
Corporation, Fairbanks, Alaska, testified in support of SB 114.
He emphasized that a spur line into the Fairbanks area would
provide residents with access to affordable LNG. He discussed
how a previous ADGC development proposal, which bypassed the
Fairbanks North Star Borough, placed strain on Fairbanks area
residents. He discussed a variety of ways ADGC has shown it does
not consider the Fairbanks spur line a priority. He noted that
the highest priority of the State of Alaska is to monetize North
Slope LNG and to satisfy the energy needs of Southcentral
Alaska. He asserted that it would be unconscionable for a trans-
Alaska gas line to bypass Fairbanks or render gas too expensive
to benefit residents. He stated that SB 114 does not solve the
issue of transporting gas to residents at an affordable price;
however, it begins an important conversation.
3:47:38 PM
GRIER HOPKINS, Mayor, Fairbanks NorthStar Borough, Fairbanks,
Alaska, testified in support of SB 114. He said it would be
unconscionable if the interior was left out but pointed out that
the project is not required to include the Fairbanks spur line.
SB 114 creates this requirement. He said it is heartening to
hear that a private business is interested in funding and
operating the spur line; however, the additional cost is
disheartening, considering that Southcentral residents do not
pay an additional fee for the Anchorage spur line. He said the
interior LNG market is expanding and preparing for the necessary
infrastructure. He noted that the Fairbanks North Star Borough
is working to increase the customer base and is working to
connect the local military bases to natural gas. He emphasized
the importance of SB 114.
3:50:48 PM
ELENA SUDDUTH, General Manager, Interior Gas Utility, Fairbanks,
Alaska, testified in support of SB 114. She said interior Alaska
has some of the highest utility costs in the country. This is
due in part to the harsh climate and to highly expensive fuel
sources. She emphasized the strain this puts on families and
businesses, making it difficult for the region to grow. She said
the Interior Gas Utility (IGU) serves approximately 1.5 billion
cubic feet (bcf) of LNG per year to homes and businesses. She
briefly described this process and emphasized the high cost. She
said the cost is twice that of Southcentral Alaska. She stated
that this cannot continue and referred to the $44 billion spent
on the natural gas pipeline. She noted that the Wood Mackenzie
study considers 11 bcf/year and said an increase of $1.20 would
only be possible if the gas is affordable. She briefly discussed
how high costs in interior Alaska could impact costs for all
Alaskans. She indicated that IGU is ready and willing to put
forth the required effort to develop the necessary
infrastructure to support the Fairbanks spur line. She
emphasized that the cost of building the spur line cannot be
placed on ratepayers.
3:54:06 PM
KEN HUCKABA, representing self, Wasilla, Alaska, testified with
concerns on SB 114. He mentioned contracts and briefly discussed
how Australia was negatively impacted by export contracts. He
emphasized that Alaska needs first-take, long-term, low-cost
contracts. He expressed concern that the discussion has turned
to tariffs. He stated that the agreements, plans, and intentions
do not equal contracts.
3:55:55 PM
CHAIR GIESEL held public testimony open.
3:56:13 PM
CHAIR GIESSEL held SB 114 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 4.7.25 Pegasus-Global Holdings Inc. Presentation to Senate Resources.pdf |
SRES 4/7/2025 3:30:00 PM |
|
| SB 114 Fiscal Note DCCED.pdf |
SRES 4/7/2025 3:30:00 PM |
SB 114 |
| SB 114 Research AGDC Fact Sheet 3.10.2025.pdf |
SRES 4/7/2025 3:30:00 PM |
SB 114 |
| SB 114 Research Alaska LNG Project Map 1.png |
SRES 4/7/2025 3:30:00 PM |
SB 114 |
| SB 114 Research Alaska LNG Project Map 2.png |
SRES 4/7/2025 3:30:00 PM |
SB 114 |
| SB 114 Research FNSB ACEP Report 3.10.2025.pdf |
SRES 4/7/2025 3:30:00 PM |
SB 114 |
| SB 114 Sectional Analysis version A.pdf |
SRES 4/7/2025 3:30:00 PM |
SB 114 |
| SB 114 Sponsor Statement version A.pdf |
SRES 4/7/2025 3:30:00 PM |
SB 114 |
| SB 114 Testimony - GVEA Letter of Support 3.10.25.pdf |
SRES 4/7/2025 3:30:00 PM |
SB 114 |
| SB 114 version A.pdf |
SRES 4/7/2025 3:30:00 PM |
SB 114 |