Legislature(2007 - 2008)SENATE FINANCE 532

04/30/2007 01:45 PM Senate FINANCE


Download Mp3. <- Right click and save file as

Audio Topic
01:57:15 PM Start
01:58:57 PM SB104
03:45:05 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Time Change --
+= SB 125 PERS /TRS CONTRIBUT'NS;UNFUNDED LIABILITY TELECONFERENCED
Scheduled But Not Heard
+= SB 104 NATURAL GAS PIPELINE PROJECT TELECONFERENCED
Heard & Held
Invited Testimony from Builders on
Issues Addressed:
Ron Brintnell, Director Alaska Gas
Development, Enbridge
Invited Testimony from Producers on
Issues Addressed:
Brian Wenzel, VP, ANS Gas
Commercialization, ConocoPhillips
Wendy King, ConocoPhillips
+ Bills Previously Heard/Scheduled TELECONFERENCED
                            MINUTES                                                                                           
                    SENATE FINANCE COMMITTEE                                                                                  
                         April 30, 2007                                                                                       
                           1:57 p.m.                                                                                          
                                                                                                                                
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Bert Stedman convened the meeting at approximately                                                                     
1:57:15 PM.                                                                                                                   
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Charlie Huggins, Vice Chair                                                                                             
Senator Kim Elton                                                                                                               
Senator Donny Olson                                                                                                             
Senator Joe Thomas                                                                                                              
Senator Fred Dyson                                                                                                              
                                                                                                                                
Also  Attending:    RON  BRINTNELL,  Director,  Gas  Development,                                                             
Enbridge;    BRIAN    WENZEL,    Vice    President,    ANS    Gas                                                               
Commercialization,  ConocoPhillips; WENDY  KING, Manager,  Alaska                                                               
North Slope Gas Development, ConocoPhillips;                                                                                    
                                                                                                                                
Attending via Teleconference:  There were no teleconference                                                                   
participants.                                                                                                                   
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB 104-NATURAL GAS PIPELINE PROJECT                                                                                             
                                                                                                                                
The Committee heard from representatives of Enbridge and                                                                        
ConocoPhillips. The bill was held in Committee.                                                                                 
                                                                                                                                
SB 125-PERS /TRS CONTRIBUT'NS; UNFUNDED LIABILITY                                                                               
                                                                                                                                
This bill was scheduled but not heard.                                                                                          
                                                                                                                                
                                                                                                                                
1:58:57 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 104(JUD)                                                                                            
     "An  Act  relating to  the  Alaska  Gasline Inducement  Act;                                                               
     establishing  the  Alaska  Gasline Inducement  Act  matching                                                               
     contribution   fund;  providing   for   an  Alaska   Gasline                                                               
     Inducement  Act coordinator;  making conforming  amendments;                                                               
     and providing for an effective date."                                                                                      
                                                                                                                                
                                                                                                                                
This was the twelfth hearing for this bill in the Senate Finance                                                                
Committee.                                                                                                                      
                                                                                                                                
RON BRINTNELL, Director, Gas Development, Enbridge, testified,                                                                  
making the following opening statement.                                                                                         
                                                                                                                                
     My  responsibility with  Enbridge  includes positioning  the                                                               
     company  to  play a  lead  role  in  the development  of  an                                                               
     Alaskan natural gas  pipeline project - a  project which has                                                               
     been a high  priority for our company for a  number of years                                                               
     and it's a high priority for our senior executives.                                                                        
                                                                                                                                
     Enbridge is  a leading North American  energy transportation                                                               
     company.  We're a  public company.  Our stock  is traded  on                                                               
     both  the New  York  Stock Exchange  and  the Toronto  Stock                                                               
     Exchange. We supply  a significant amount of  the oil that's                                                               
     required in  the Lower  48 and  we have  pipeline businesses                                                               
     that take all over the world.                                                                                              
                                                                                                                                
     I've been  to Juneau  several times  and testified  before a                                                               
     number of  committees. But this  is the first time  in front                                                               
     of Senate Finance, so I  look forward to the opportunity. My                                                               
     hope  is that  this will  be  a dialog  not a  presentation.                                                               
     That's my preference. I think  we can probably address a lot                                                               
     more of your questions and issues if we make it a dialog.                                                                  
                                                                                                                                
     I would  like to start  by first reiterating a  message that                                                               
     my  colleges and  myself have  made several  times over  the                                                               
     last few  years. North  American supply  and demand  is very                                                               
     fragile. I know  you all know that but  it's worth repeating                                                               
     again and again. If Alaska gas  is to find a market in North                                                               
     America, time is  truly of the essence. We need  the gas but                                                               
     expediency  is  important.  Real   progress,  not  just  the                                                               
     appearance of progress is got to happen.                                                                                   
                                                                                                                                
     We've  been asked  about  the market  window  theory. If  we                                                               
     believe that Alaska gas will  hit the market, when and where                                                               
     it's needed. When we answer this  it's not so much about the                                                               
     timing of the market, but is  it still going to be there? We                                                               
     are genuinely concerned  about the fact that  the market may                                                               
     be  moving on,  that it  may be  leaving Alaska  gas behind.                                                               
     We've seen market  degradation due to supply  issues, due to                                                               
     cost issues, due  to price issues. We see  coal plants being                                                               
     contemplated. I know there are  lots of environmental issues                                                               
     associated with  coal but the  reality is demand  and supply                                                               
     will match. If gas can't  supply the demand other sources of                                                               
     electricity  will  come  into   play.  We'll  also  see  LNG                                                               
     [liquefied natural gas] come on.                                                                                           
                                                                                                                                
Mr.  Brintnell utilized  a presentation  titled, "Alaska  Natural                                                               
Gas Pipeline" [copy on file.]                                                                                                   
                                                                                                                                
2:01:39 PM                                                                                                                    
                                                                                                                                
     Page 2                                                                                                                     
                                                                                                                                
     [Maps  of   North  America,   Columbia,  and   although  not                                                               
     identified,  likely  Spain.  On   these  maps  locations  of                                                               
     Liquids Transportation, Gas  Transmission, Gas Distribution,                                                               
     and Wind farms/developments are identified.]                                                                               
                                                                                                                                
        · Interest in 50,000 miles of pipelines                                                                                 
        · Own and operate the world's longest liquid petroleum                                                                  
          pipeline                                                                                                              
        · Deliver 70% of WCSB crude oil production                                                                              
        · Deliver half of deep water Gulf of Mexico natural gas                                                                 
          production                                                                                                            
        · Canada's largest natural gas local distribution                                                                       
          company                                                                                                               
        · Employ 4,900 people                                                                                                   
        · One of the Global 100 Most Sustainable Corporations in                                                                
          the World                                                                                                             
                                                                                                                                
Mr.  Brintnell stated  that the  company  that eventually  became                                                               
Enbridge was  founded in  1949. The  company had  "grown steadily                                                               
though development and acquisition"  and "operated at the highest                                                               
levels in the  business community." He proceeded to  speak to the                                                               
bullet points.                                                                                                                  
                                                                                                                                
Mr.  Brintnell  identified  the Liquids  Transportation  pipeline                                                               
between  Norman Wells  and Zama  as the  first pipeline  built in                                                               
permafrost in Canada. It was  constructed over 20 years prior and                                                               
has been operating since.                                                                                                       
                                                                                                                                
2:02:19 PM                                                                                                                    
                                                                                                                                
Mr.  Brintnell declared  that Enbridge  operated  in the  arctic,                                                               
which  was significantly  different  than "cold  weather" that  a                                                               
different company testified  as its area of  experience. No other                                                               
pipeline  company operating  in North  America had  the level  of                                                               
arctic experience of Enbridge.                                                                                                  
                                                                                                                                
2:02:55 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell  pointed out the  Alliance gas  pipeline traversing                                                               
from Fort  St. John  in British Columbia,  Canada to  Chicago and                                                               
further east.  This pipeline "has  significance" to  the proposed                                                               
Alaska natural gas pipeline.                                                                                                    
                                                                                                                                
Mr. Brintnell continued  detailing locations on the  map of North                                                               
America.  Enbridge  provided  gas to  approximately  1.7  million                                                               
customers.  It operates  gas transmission  lines in  the southern                                                               
and mid-western United States.                                                                                                  
                                                                                                                                
Mr. Brintnell  remarked, "And, yes  we're always looking  for new                                                               
supply." He  added that  "Along with looking  for an  interest in                                                               
the pipeline, Enbridge  may be looking for Alaska to  be a supply                                                               
of gas. We may take a shipping commitment."                                                                                     
                                                                                                                                
Mr. Brintnell  advised that the  company's inclusion as  a Global                                                               
100 Most Sustainable  Corporations in the World was  based on its                                                               
performance  on  social,  environmental  and  governance  issues.                                                               
Enbridge took "pride in being good corporate citizens."                                                                         
                                                                                                                                
2:04:05 PM                                                                                                                    
                                                                                                                                
     Page 3                                                                                                                     
                                                                                                                                
     Unparalleled Experience in Recent Pipeline Development                                                                     
        · $15 billion over the next 10 years                                                                                    
             o Unmatched recent experience managing labor,                                                                      
               construction,       procurement,      environment,                                                               
               regulatory and cost-control challenges                                                                           
             o Today's development environment is substantially                                                                 
               different than 10 years ago                                                                                      
        · Alliance Pipeline                                                                                                     
            o Technical and commercial similarities                                                                             
     [Map of North America  depicts Proposed Pipeline Development                                                               
     with   Canadian   Supplied   and   Not   Canadian   Supplied                                                               
     Refineries,  Enbridge Pipelines,  Enbridge Energy  Partners,                                                               
     and Potential Projects  identified. Major Announced Projects                                                               
     are   identified   on  the   map   and   also  listed   with                                                               
     corresponding In-Service date as follows:                                                                                  
          Spearhead                     Q1 2006                                                                                 
          Gulf Coast (XCM)              Q1 2006                                                                                 
          Southern Access Expansion     2009                                                                                    
          Southern Access Extension     2009                                                                                    
          Southern Lights               2009                                                                                    
          Alberta Clipper               2009                                                                                    
          Gateway                       2012/14]                                                                                
                                                                                                                                
Mr. Brintnell  claimed that the  "resource owners,  producers and                                                               
shippers  that we  deal with  on a  day-to-day basis  continue to                                                               
express their confidence in us."  Recently, the company concluded                                                               
a  successful  open  season on  an  extension  from  metropolitan                                                               
Chicago  to Cushing,  Oklahoma. This  comprised part  of the  $15                                                               
billion   North  American   expansion  which   was  planned   for                                                               
completion over then  next five to ten years. Most  of the growth                                                               
was associated with development in the Alberta "tar sands".                                                                     
                                                                                                                                
Mr.   Brintnell   spoke   about   the   "current"   "cross-border                                                               
permitting"  and other  experience in  large scale  North America                                                               
pipeline  projects  that  Enbridge   would  achieve  through  its                                                               
expansion efforts.                                                                                                              
                                                                                                                                
Mr. Brintnell assured  that adequate jobs would  be available for                                                               
Alaskans contrary  to some concerns.  Enbridge would  employ "all                                                               
Alaskans that  want to come across  the border to be  trained up"                                                               
for  pipeline construction  projects  for the  next  five to  ten                                                               
years. The workforce is in short supply.                                                                                        
                                                                                                                                
2:05:43 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell told of many  changes in the pipeline industry over                                                               
the  past ten  years,  including the  labor market.  Additionally                                                               
steel prices  had increased substantially.  Also changed  was the                                                               
"dynamic of  who steps  up to take  capacity on  pipelines." More                                                               
marketing companies  would have been  involved five to  ten years                                                               
ago,  but  because  of  the issues  regarding  Enron,  "that  all                                                               
changed."                                                                                                                       
                                                                                                                                
Mr. Brintnell pointed out that  in the current projects, Enbridge                                                               
was  interacting   with  the   U.S.  Federal   Energy  Regulatory                                                               
Commission (FERC)  and the Canadian National  Energy Board (NEB),                                                               
as  well  as environmental  groups,  Canadian  First Nations,  US                                                               
Native organizations and other stakeholders.                                                                                    
                                                                                                                                
2:06:37 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell  emphasized the  "recent experience,  knowledge and                                                               
training" gained from Enbridge's  efforts that would be available                                                               
for the Alaska natural gas pipeline project.                                                                                    
                                                                                                                                
2:06:47 PM                                                                                                                    
                                                                                                                                
     Page 4                                                                                                                     
                                                                                                                                
     Alliance Pipeline                                                                                                          
     [Dateline depicts the process of obtaining a NEB                                                                           
     certificate and a FERC certificate as follows:                                                                             
          NEB {Canadian}                                                                                                        
          Preliminary Submission        Dec. 31, 1996                                                                           
          File Application              July 3, 1997                                                                            
          Public Hearing                Jan. 1998                                                                               
          Public Hearing                May 1998                                                                                
          Draft CSR                     June 30, 1998                                                                           
          Final CSR                     Sept. 30, 1998                                                                          
          Certificate                   Dec. 3, 1998                                                                            
                                                                                                                                
          FERC {United States}                                                                                                  
          File Application              Dec. 24, 1996                                                                           
          Preliminary (non-environmental                                                                                        
               Determination            Aug. 1, 1997                                                                            
          Draft EIS                     Dec. 24, 1997                                                                           
          Final EIS                     Aug. 24, 1998                                                                           
         Certificate                   Sept. 17, 1998]                                                                          
                                                                                                                                
                                                                                                                                
Mr. Brintnell  utilized this  as an example  of the  timeframe in                                                               
which  certification  from  Canadian  and US  agencies  could  be                                                               
secured. He noted that the  process for the Alliance Pipeline was                                                               
completed in less than 24 months.                                                                                               
                                                                                                                                
Mr. Brintnell  recounted the initial  participation of  22 owners                                                               
in  the Alliance  project. All  parties  remained involved  until                                                               
each became  "comfortable" that the project  would progress, that                                                               
sufficient  financing was  obtained and  commitments of  gas were                                                               
secured from producers.                                                                                                         
                                                                                                                                
2:08:22 PM                                                                                                                    
                                                                                                                                
     Page 5                                                                                                                     
                                                                                                                                
     Moving the Project Forward                                                                                                 
        · No producers No pipeline!                                                                                             
        · Project is too risky - too big, too complex, too                                                                      
         expensive - to move forward without producers                                                                          
        · Potential gas buyers see no producers as no progress                                                                  
             o Buyers' dilemma, switch to coal, go off-shore or                                                                 
               wait for Alaska?                                                                                                 
                                                                                                                                
Mr. Brintnell had  followed the progress on  the AGIA legislation                                                               
through  both bodies  of the  legislature and  had not  heard any                                                               
organization  that  had  previously  constructed  or  operated  a                                                               
pipeline refute the  statement that the project  must include the                                                               
producers. Some had expressed need  for a five-party negotiation,                                                               
others  required fiscal  stability, and  others had  testified to                                                               
different requirements.                                                                                                         
                                                                                                                                
Mr. Brintnell opined,  "If you legislate a  process unworkable to                                                               
the producers, it's  our view that [it would] put  the project at                                                               
risk  [be]cause  you're  excluding  the  necessary  participants,                                                               
further  delaying  the project  and  signaling  to potential  gas                                                               
buyers [that] Alaska's just not ready."                                                                                         
                                                                                                                                
Mr. Brintnell  spoke to  the earlier  presentation to  the Senate                                                               
Finance Committee  by Sullivan and Cromwell  regarding "financing                                                               
in the  face of risk."  Enbridge agreed with the  conclusion that                                                               
the North  Slope producers were  the "best  positioned companies"                                                               
to assume  the level of  risk and make the  shipping commitments.                                                               
Mr.  Brintnell considered  the producers  as  possibly "the  only                                                               
companies" capable for such undertaking.                                                                                        
                                                                                                                                
2:09:36 PM                                                                                                                    
                                                                                                                                
Mr.  Brintnell  announced  that  Enbridge  would  not  submit  an                                                               
application for AGIA.  Until the producers were  prepared to make                                                               
a shipping  commitment, which would  require a resolution  of the                                                               
tax issues, "we don't see how  it moves things forward for anyone                                                               
else to submit an application either."                                                                                          
                                                                                                                                
Mr. Brintnell clarified, "We anticipate  ultimately being part of                                                               
the project,  as part of  a consortium." Enbridge  was interested                                                               
in participating.                                                                                                               
                                                                                                                                
2:10:07 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell reiterated his job  duty was to involve Enbridge in                                                               
an Alaska natural gas pipeline  project, potentially as an equity                                                               
owner, an operator, and a  shipper. However, this would not occur                                                               
with the current uncertainty associated with the producers.                                                                     
                                                                                                                                
2:10:18 PM                                                                                                                    
                                                                                                                                
Mr.  Brintnell asserted  that  Enbridge could  add  value to  the                                                               
project, but until  the producers "were on board  and signaling a                                                               
willingness to  make shipping commitments that  will underpin the                                                               
financing of the project, this project  is simply too risky for a                                                               
pipeline company like Enbridge to  spend the hundreds of millions                                                               
… of dollars up front."  The  issue was not that the company took                                                               
risks;  it  was  currently  investing billions  of  dollars  into                                                               
projects. However, "this one's in a whole new category."                                                                        
                                                                                                                                
2:10:51 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell characterized the  "pipeline business" as a "really                                                               
small group" with  few companies operating in  North America. The                                                               
companies attend  many functions together and  discuss customers,                                                               
which in  the case of  the Alaska  natural gas pipeline,  are the                                                               
North  Slope producers.  Customers would  be required  to advance                                                               
the project.  Although utility companies could  participate, they                                                               
would not have the ability to be significant contributors.                                                                      
                                                                                                                                
2:11:38 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell  informed that potential  buyers of  Alaska natural                                                               
gas "have been hearing for a  long time that Alaska gas is ready,                                                               
ramping  up,  and  more  recently  there  was  negotiations  with                                                               
producers." An  election was held,  and the  negotiations ceased.                                                               
At this  time the State  was taking an alternate  approach, which                                                               
was  its   right.  However,  this   caused  uncertainty   in  the                                                               
marketplace as  to when the gas  would "arrive" "or even  if it's                                                               
going to arrive".                                                                                                               
                                                                                                                                
2:12:13 PM                                                                                                                    
                                                                                                                                
     Page 6                                                                                                                     
                                                                                                                                
     Moving the Project Forward                                                                                                 
     Don't Just Focus On The Pipeline                                                                                           
        · As drafted, AGIA is unlikely to produce significant                                                                   
          commercial results.                                                                                                   
        · AGIA introduced as a catalyst to expedite the                                                                         
          construction of a natural gas pipeline                                                                                
        · AGIA focus is on the pipeline and not entire project                                                                  
          which requires Producer alignment                                                                                     
        · AGIA adds unnecessary regulatory complexity                                                                           
             o FERC process well defined and effective                                                                          
                                                                                                                                
Mr. Brintnell stated the following.                                                                                             
                                                                                                                                
     We  believe the  Governor and  her team  deserve recognition                                                               
     for  the priority  they placed  on the  project. We  believe                                                               
     they  appreciate  how  important  Alaska  gas  is  to  North                                                               
     America.  However, Enbridge  is  concerned  that as  written                                                               
     AGIA is unlikely to result in the movement of Alaska gas.                                                                  
     AGIA's focus  seems to be  90 percent pipeline,  ten percent                                                               
     producer-shipper.  We think  that's the  reverse of  what is                                                               
     needed.                                                                                                                    
     We  believe  that 90  percent  of  the  focus should  be  on                                                               
     getting  a shipper  and ten  percent on  the pipeline.  Now,                                                               
     whether it's 90/10,  80/20, what we're trying to  say is the                                                               
     focus is  wrong. The majority  of the focus right  now seems                                                               
     to be  on the pipeline not  on the project, and  in order to                                                               
     get a  project you  need shippers, which  means you  need to                                                               
     talk to producers.                                                                                                         
                                                                                                                                
2:13:10 PM                                                                                                                    
                                                                                                                                
Mr.   Brintnell   "took   the  risk   of   talking   legislation"                                                               
hypothesizing that before a  committee chairperson would consider                                                               
granting a hearing  on a matter, legislation must  be drafted and                                                               
the  bill  referred to  the  committee.  To pipeline  developers,                                                               
builders  and operators,  AGIA appeared  as legislation  that had                                                               
not been drafted  or referred to a committee.  He stated "without                                                               
shippers  there is  no bill;  someone has  to agree  to ship  the                                                               
gas."                                                                                                                           
                                                                                                                                
2:14:19 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
Mr. Brintnell commended  the Legislature for the  time and effort                                                               
devoted  to the  Alaska  natural gas  pipeline project.  However,                                                               
ultimately  a shipper  was required.  The goal  was to  "move the                                                               
gas" not just build the pipeline.                                                                                               
                                                                                                                                
2:14:32 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell made the following statement.                                                                                     
                                                                                                                                
     Enbridge  believes  that  AGIA adds  unnecessary  regulatory                                                               
     complexity  especially with  respect to  rolled in  rates. …                                                               
     The potential  for rolled in  rates to go  up is not  only a                                                               
     negative for North Slope producers,  and I know you've heard                                                               
     that  over and  over again,  but  it's also  a negative  for                                                               
     utilities like Enbridge's. …                                                                                               
     It is  very difficult  to get regulatory  people to  give us                                                               
     permission  to take  any long  term  contracts period  these                                                               
     days.  We're  not  unique  in  that. All  of  the  Lower  48                                                               
     utilities face the same thing.  It's a difficult task to get                                                               
     the local regulatory bodies to  give you the ability to take                                                               
     a long term commitment to take a long term supply.                                                                         
     Part of that  just as a history I talked  about before, five                                                               
     ten years ago the utilities  bowed out the marketers stepped                                                               
     in, the  Enrons stepped  in and the  regulators got  used to                                                               
     the  fact  that utilities  didn't  have  to take  long  term                                                               
     contracts.                                                                                                                 
     With the demise  of the marketers - some of  them are coming                                                               
     back, but generally the demise  of the marketers - utilities                                                               
     are now trying  once again to be able to  look at being able                                                               
     to take long term contracts.  But the regulators are pushing                                                               
     back.                                                                                                                      
     Enbridge  has spent  a  fair a  bit of  time  over the  last                                                               
     couple years in dialog  with NARUC, the National Association                                                               
     of Regulatory  Utility Commissioners, the IOGCC,  and others                                                               
     to  try  to do  an  educational  process  with some  of  the                                                               
     regulators   to  let   those   utilities   take  long   term                                                               
     commitments, for example on an  Alaska pipeline. But it's an                                                               
     uphill battle.                                                                                                             
     It's even more uphill when you  have to go to your regulator                                                               
     and say "I'm going to make  a commitment and I'm agreeing to                                                               
     pay x - oh, buy the way, in  15 years from now it might be x                                                               
     plus 15  percent." So  it's not just  the producers  who are                                                               
     going  to have  trouble with  this. It's  other shippers  as                                                               
     well.                                                                                                                      
                                                                                                                                
2:16:24 PM                                                                                                                    
                                                                                                                                
     Page 7                                                                                                                     
                                                                                                                                
     Moving the Project Forward                                                                                                 
     Promote, Don't Stymie Innovation                                                                                           
        · Absolute requirements may result in not having the                                                                    
          opportunity to evaluate creative solutions  that add                                                                  
          value in different ways                                                                                               
        · This is not a standard RFP project                                                                                    
                                                                                                                                
Mr.  Brintnell expressed  concern  with the  language of  Section                                                               
43.90.130.  Application  requirements.,   of  Article  2.  Alaska                                                               
Gasline Inducement Act License., added  by Section 1 of the bill.                                                               
The State would "end up further  ahead by clearly stating what it                                                               
is they want,  and then allowing the best companies  in the world                                                               
to pose  the best  way to  get there."  The current  language was                                                               
tantamount  to  a  "command and  control  arrangement"  in  which                                                               
"companies  could not  leverage their  experience to  the State's                                                               
advantage even if they apply at all."                                                                                           
                                                                                                                                
Mr.  Brintnell failed  to understand  why "Alaska  would want  to                                                               
create a process  that might stymie innovation and  result in the                                                               
best project  not moving forward,  or more concerning,  result in                                                               
no  project moving  forward."  He asked  why  the Senators  would                                                               
support a process in which they  would not have an opportunity to                                                               
consider  a  proposal that  "doesn't  check  all the  boxes,  but                                                               
potentially could offer more significant  value to the State." He                                                               
predicted a  situation could occur  in which an  application that                                                               
failed  to  meet   all  criteria  would  not   be  furthered  for                                                               
legislative review and approval.                                                                                                
                                                                                                                                
Mr.  Brintnell spoke  of experts  with an  ability to  assist the                                                               
State   in  determining   successful  and   unsuccessful  project                                                               
applications.  Fair judgment  of  all  proposals was  "absolutely                                                               
possible" albeit  more difficult.  He was  unsure "what  the bill                                                               
drafters are  afraid of here and  why they insist on  a potential                                                               
developer meeting all the requirements or not show up."                                                                         
                                                                                                                                
Mr.  Brintnell shared  that pipeline  developers compete  against                                                               
other developers  and "make pitches" to  potential shippers about                                                               
their  innovative methods.  This  process involves  collaboration                                                               
with shippers to achieve solutions and flexibility is necessary.                                                                
                                                                                                                                
2:19:01 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell  advised that  "what you  negotiated today  may not                                                               
ultimately be  what ends up  being the  best project in  the long                                                               
term,  or  the  ultimate  solution."  He  acknowledged  that  the                                                               
government  request for  proposals (RFP)  practice was  specific,                                                               
and  intended   to  facilitate  an   "easier  apples   to  apples                                                               
comparison" of  proposals. However, the gas  pipeline project was                                                               
not a standard  project. Rather it was unique in  many ways, with                                                               
the "sheer scope"  being only one. The State must  "assume a non-                                                               
traditional  role" and  engage in  non-traditional processes  "in                                                               
order for  this to  work. Insistence on  utilization of  the same                                                               
processes used  for procurement of office  supplies and equipment                                                               
would result in failure to achieve a pipeline.                                                                                  
                                                                                                                                
2:20:06 PM                                                                                                                    
                                                                                                                                
     Page 8                                                                                                                     
                                                                                                                                
     Canadian Oil Sands Development                                                                                             
     Valuable Lessons                                                                                                           
                                                                                                                                
        · Investment of $125 billion                                                                                            
             o Significant new employment, tax revenue, long                                                                    
               term growth                                                                                                      
             o Extensive new pipeline development                                                                               
        · Resulted from proactive progressive political vision                                                                  
          that facilitated development                                                                                          
             o Worked cooperatively with industry                                                                               
             o Generating greater returns for all                                                                               
     Industry Capital Spending                                                                                                  
     Cdn $billions                                                                                                              
     [Map of Canada with the following information superimposed:                                                                
          The oil & gas industry will invest over $40 billion in                                                                
          capital in Canada in 2006                                                                                             
               Northern Canada                                                                                                  
                    '03       $0.3                                                                                              
                    '04        0.3                                                                                              
                    '05E       0.5                                                                                              
                    '06F       0.5                                                                                              
               Oil Sands                                                                                                        
                    '03       $5.0                                                                                              
                    '04        6.2                                                                                              
                    '05E       8.5                                                                                              
                    '06F       8.8                                                                                              
               WCSB                                                                                                             
                    '03       $21.4                                                                                             
                    '04        24.5                                                                                             
                    '05E       27.0                                                                                             
                    '06F       29.0                                                                                             
               East Coast Offshore                                                                                              
                    '03       $2.2                                                                                              
                    '04        1.9                                                                                              
                    '05E       1.0                                                                                              
                    '06F       1.7                                                                                              
               International                                                                                                    
                    '03       $5.5                                                                                              
                    '04       10.4                                                                                              
                    '05E       5.0                                                                                              
                    '06F       6.8                                                                                              
          Note: Spending in Canada excludes spending associated                                                                 
          with mergers and acquisitions. International and                                                                      
          acquisitions net of divestures.]                                                                                      
     Canadian and U.S. Crude Oil Pipeline Alternatives                                                                          
     Growing  oil  sands  production will  require  new  pipeline                                                               
     capacity to existing and expanded markets                                                                                  
     [Map of  contiguous United States  and the southern  half of                                                               
     Canada  with   Potential  Pipeline  Expansion   Routes,  and                                                               
     Extensions to New Markets delineated.]                                                                                     
                                                                                                                                
Mr. Brintnell read from his testimony as follows.                                                                               
                                                                                                                                
     I  mentioned   earlier  that  if  moving   the  resource  is                                                               
     commercially  viable,   investment  dollars  will   flow  in                                                               
     Alaska.  That   very  thing  is   happening  right   now  in                                                               
     Enbridge's  own backyard  and it's  called the  Canadian Oil                                                               
     Sands.                                                                                                                     
     We believe  that you  have to  look at  the gas  pipeline as                                                               
     just the  first stage  of developing  a bigger  project just                                                               
     like they did in Alberta.                                                                                                  
     You've  got tremendous  potential  here. You've  got 35  tcf                                                               
     [trillion cubic  feet], but that's  still 20 tcf short  of a                                                               
     pipeline.  But indications  are there's  much, much  more. I                                                               
     mean if  you look at the  sheer potential of gas  side rates                                                               
     it's  staggering. But  it's not  possible to  tap into  that                                                               
     without a pipeline.                                                                                                        
     Alberta recognized  the potential of  its oil sands  when it                                                               
     started  negotiating with  its producers.  At the  time they                                                               
     didn't come up  with the ultimate solution;  but they showed                                                               
     they were  willing to be  flexible, come up  with innovative                                                               
     solutions and  right now  we're looking  at $125  billion in                                                               
     investment.                                                                                                                
                                                                                                                                
2:21:20 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell continued.                                                                                                        
                                                                                                                                
     That's  something like  four times  the Permanent  Fund. Did                                                               
     the original  people that negotiated those  deals think they                                                               
     might have $125 billion in  investment? I doubt it. I wasn't                                                               
     there but  I doubt it. But  what happened was that  they got                                                               
     the snowball rolling.                                                                                                      
     We think  the same  thing can happen  here in  Alaska. Don't                                                               
     look to  get the ultimate  solution first. Get  the snowball                                                               
     rolling and it will keep rolling.                                                                                          
                                                                                                                                
2:21:52 PM                                                                                                                    
                                                                                                                                
     Page 9                                                                                                                     
                                                                                                                                
     Moving the Project Forward                                                                                                 
     Understand What Is Achievable                                                                                              
        o Binding or shipper commitment is required prior to                                                                    
          spending significant $'s on regulatory applications                                                                   
             o Not commercially prudent to assume producers will                                                                
              show, or that gas can be "acquired"                                                                               
             o Risk too high even with government cost sharing                                                                  
        o Even binding shipper/pipeline agreements will have                                                                    
          conditions including:                                                                                                 
             o An acceptable FERC Certificate                                                                                   
             o Acceptable Financing                                                                                             
             o Shipper resolution of Alaska state taxation                                                                      
               issues                                                                                                           
             o Defined project milestones/timing                                                                                
        o An unconditional commitment to proceed will not happen                                                                
             o Regulatory certificates may have conditions                                                                      
               making project uneconomic                                                                                        
             o Events between application and certificate could                                                                 
               make project uneconomic                                                                                          
                                                                                                                                
Mr. Brintnell overviewed the information  on this page. The State                                                               
would not  receive an unconditional  commitment for  this project                                                               
to proceed,  despite the  intent of  Alaskans. However,  too many                                                               
uncertainties  exist with  any pipeline  project, especially  the                                                               
proposed   Alaska   natural   gas  pipeline.   Concerns   include                                                               
conditions imposed by U.S. and  Canadian regulatory agencies, the                                                               
labor  market and  the  steel  market could  change  in the  time                                                               
following submission of an application.                                                                                         
                                                                                                                                
2:23:28 PM                                                                                                                    
                                                                                                                                
     Page 10                                                                                                                    
                                                                                                                                
     Moving the Project Forward                                                                                                 
     Understand Canada                                                                                                          
                                                                                                                                
     No company has the exclusive right to build a pipeline to                                                                  
     ship Alaska gas in Canada                                                                                                  
          o 2 Options to Permit the Project Through Canada                                                                      
               NPA                                                                                                              
                    Northern Pipeline Act passed in 1977                                                                        
                    Socio-economic  baseline impact  developed in                                                               
                    late 1970s                                                                                                  
                    Certificates   of   Public  Convenience   and                                                               
                    Necessity  issued  to Foothills  Pipeline  to                                                               
                    build the  Cdn portion of the  Alaska Natural                                                               
                    Gas Transportation System proposal.                                                                         
                    Enshrines   a  30-year   old  project   never                                                               
                    undertaken   that   has   now   significantly                                                               
                    changed                                                                                                     
               NEB - CEAA                                                                                                       
                    Modern, efficient  and transparent regulatory                                                               
                    process                                                                                                     
                    Dove-tails with FERC                                                                                        
                    Consistent with NAFTA                                                                                       
                    Contemporary, well understood processes:                                                                    
                         First Nations participation                                                                            
                         Environmental assessments and practices                                                                
                         Economic    benefits     through    open                                                               
                         competition                                                                                            
                                                                                                                                
Mr. Brintnell  emphasized this information. Neither  the National                                                               
Energy Board (NEB)  nor the Northern Pipeline  Act (NPA) contains                                                               
a provision  to grant exclusive  rights to transport  natural gas                                                               
from Alaska through  Canada. Enbridge had prepared  a document to                                                               
further  this  argument,  which  he offered  to  provide  to  the                                                               
Committee [copy not provided].                                                                                                  
                                                                                                                                
Mr.  Brintnell  remarked  on  the   benefit  the  prohibition  on                                                               
exclusivity. If allowed, the competition  would be limited to the                                                               
construction  of the  Alaska portion  of the  pipeline and  would                                                               
lack  the  "same  level  of competition  and  creativity  on  the                                                               
Canadian side."                                                                                                                 
                                                                                                                                
Mr.  Brintnell opined  that the  only  viable route  on which  to                                                               
transport natural gas from Alaska would be through Canada.                                                                      
                                                                                                                                
2:25:11 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell  surmised that  the Canadian  government understood                                                               
the value of this cooperative yet competitive approach.                                                                         
                                                                                                                                
     Page 11                                                                                                                    
                                                                                                                                
     Moving the Project Forward                                                                                                 
     Understand Canada                                                                                                          
                                                                                                                                
     "As we move forward, I am guided by five principles that I                                                                 
     believe can be applied to all pipeline decisions:                                                                          
          o First, the must not interfere with market forces. We                                                                
             will let the market decide.                                                                                        
          o Second, our decisions must be supportive of a modern                                                                
             regulatory regime                                                                                                  
          o Third there must be a project management approach                                                                   
          o Fourth, the pipelines must support Aboriginal                                                                       
             economic development                                                                                               
          o Finally, decisions must ensure that Canadian                                                                        
             benefits are realized                                                                                              
                                          Honourable Jim Prentice                                                               
              Minister of Indian Affairs and Northern Development                                                               
             Presentation to Canadian Energy Pipeline Association                                                               
                                                    Annual Dinner                                                               
                                                         May 2006                                                               
                                                                                                                                
Mr.  Brintnell read  this quote  into the  record. Mr.  Brintnell                                                               
added  that  Mr. Prentice  had  "also  got the  Alaska  pipeline,                                                               
McKenzie gas pipeline portfolio."                                                                                               
                                                                                                                                
Mr.  Brintnell associated  Mr. Prentice's  comment regarding  the                                                               
market  forces  with  his  statements   about  the  necessity  of                                                               
competition.                                                                                                                    
                                                                                                                                
Mr.  Brintnell   defined  project  management  approach   as  "no                                                               
different that what we're trying to  achieve here; a step by step                                                               
process in  which we go through  each of the gates  and make sure                                                               
that this project makes sense."                                                                                                 
                                                                                                                                
2:26:29 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell  recounted Enbridge  being approached by  the Yukon                                                               
First  Nation  requesting  information regarding  pipelines.  The                                                               
company educated  these residents with the  basic fundamentals of                                                               
pipeline  construction  and   environmental  impacts.  The  Yukon                                                               
Territory government,  the Canadian federal government  and other                                                               
agencies  have also  participated in  dialog with  First Nations.                                                               
Many Native Alaskans had also never seen a pipeline.                                                                            
                                                                                                                                
2:27:20 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell acknowledged the "alarm  bells" expressed by Alaska                                                               
legislators  upon  learning  of  Mr.  Prentice's  expectation  of                                                               
Canadian  benefits  from  an Alaska  natural  gas  pipeline.  Mr.                                                               
Brintnell  explained  that  the  costs  could  not  outweigh  the                                                               
benefits.  Roads,  bridges  and  other  infrastructure  would  be                                                               
constructed in  Canada to accommodate the  pipeline and Canadians                                                               
must receive some benefit in exchange.                                                                                          
                                                                                                                                
2:27:49 PM                                                                                                                    
                                                                                                                                
     Page 12                                                                                                                    
                                                                                                                                
     Moving the Project Forward                                                                                                 
     Final Thoughts                                                                                                             
                                                                                                                                
     Enbridge believes:                                                                                                         
        o Outstanding fiscal issues are the project's "elephant                                                                 
          in the living room."                                                                                                  
        o An unconditional commitment to advance the project is                                                                 
          not achievable                                                                                                        
        o AGIA will best serve Alaskans if it allows for the                                                                    
          creativity and innovation that drives the market                                                                      
          place.                                                                                                                
        o Governmental financial assistance is not essential                                                                    
        o Government can achieve key goals without adding to                                                                    
          regulatory process                                                                                                    
        o Canada will be ready for this project, but claims of                                                                  
          exclusivity will be denied                                                                                            
        o Alaska should ensure that it does not create a process                                                                
          that is all about process                                                                                             
                                                                                                                                
Mr. Brintnell remarked that until  the State could address issues                                                               
with producers  regarding taxes, the project  would experience no                                                               
tangible progression.                                                                                                           
                                                                                                                                
Mr.  Brintnell overviewed  the  bullet points  on  this page.  He                                                               
cautioned against  creation of  a process  that would  not accept                                                               
proposals  that  did not  meet  every  criteria, but  that  could                                                               
provide value in different ways.                                                                                                
                                                                                                                                
2:29:20 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell  stated that  governmental financial  assistance on                                                               
the pipeline project  was not essential, although it  could be of                                                               
value  to   a  potential  applicant   and  should   therefore  be                                                               
considered.  Additionally, undue  "regulatory complexity"  should                                                               
not be  added to the  process to create difficulty  for potential                                                               
shippers.                                                                                                                       
                                                                                                                                
Mr.  Brintnell   recognized  the   "fear"  and   potential  "fear                                                               
mongering"  that  Canada would  not  be  prepared for  an  Alaska                                                               
natural gas pipeline. However,  Canadian officials understand the                                                               
importance of this project and were making preparations.                                                                        
                                                                                                                                
2:30:30 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell concluded his presentation.                                                                                       
                                                                                                                                
2:30:33 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  announced  his   intent  in  considering  this                                                               
legislation  to identify  solutions. He  clarified that  Enbridge                                                               
did not  deem the proposed $500  million reimbursement incentives                                                               
necessary to accomplish the project.                                                                                            
                                                                                                                                
2:31:02 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell affirmed. Financial  assistance was beneficial, but                                                               
usually  "comes  with  attachments". AGIA  had  attachments,  and                                                               
those attachments  were of  greater cost  than $500  million. The                                                               
State funding  would not necessarily  be required to  finance the                                                               
project.                                                                                                                        
                                                                                                                                
2:31:44 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman spoke  of the  AIGA condition  that if  an AGIA                                                               
licensee  held an  unsuccessful  open season  it  would still  be                                                               
required  to  secure  FERC  certification.  He  asked  Enbridge's                                                               
opinion on this clause.                                                                                                         
                                                                                                                                
2:32:11 PM                                                                                                                    
                                                                                                                                
Mr.  Brintnell responded  that Enbridge  would not  be placed  in                                                               
such  a   position  that  FERC  certification   must  be  pursued                                                               
regardless  of   whether  a  successful  open   season  occurred.                                                               
Enbridge  would   not  apply  for  a   FERC  certificate  without                                                               
knowledge of "where the producers were at."                                                                                     
                                                                                                                                
Mr. Brintnell  pointed out  that the  project would  also require                                                               
certification from the Canadian  National Energy Authority (NEA).                                                               
Achievement  of the  specificity necessary  to convince  shippers                                                               
and producers to  commit gas in a binding open  season would cost                                                               
"hundreds  of  millions of  dollars".  It  could be  possible  to                                                               
expend less and  secure commitments in a  nonbinding open season.                                                               
Enbridge  would not  expend this  amount to  progress to  an open                                                               
season "beforehand not knowing the answer."                                                                                     
                                                                                                                                
Mr.  Brintnell identified  two types  of  pipelines as  "producer                                                               
pushed"  and  "market pull".  The  proposed  Alaska gas  pipeline                                                               
would be a combination.                                                                                                         
                                                                                                                                
2:33:46 PM                                                                                                                    
                                                                                                                                
Mr.  Brintnell  explained  that the  Alaska  gas  pipeline  would                                                               
likely  be  producer  pushed  from the  North  Slope  to  Alberta                                                               
Canada, and market  pulled to the Lower 48  by utility companies.                                                               
Regardless, if Enbridge were to  engage in this project, it would                                                               
have  upfront  knowledge  of  the   shippers  and  whether  those                                                               
shippers would commit.                                                                                                          
                                                                                                                                
Mr.  Brintnell  characterized  an  unsuccessful  open  season  as                                                               
"career limiting". A pipeline company  should always know upfront                                                               
that an open season would  be successful. Under the provisions of                                                               
AGIA an  open season could be  held with no advance  knowledge of                                                               
whether shippers would commit.                                                                                                  
                                                                                                                                
2:34:57 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman understood  that Enbridge  would not  apply for                                                               
the AGIA license.                                                                                                               
                                                                                                                                
2:34:59 PM                                                                                                                    
                                                                                                                                
Mr.  Brintnell  affirmed  that  Enbridge  would  not  be  a  sole                                                               
applicant  for the  AGIA license  under  the current  legislative                                                               
provisions. Enbridge  "hoped" to  participate in a  consortium. A                                                               
consortium  that  included the  producers  would  be required  to                                                               
undertake the project.                                                                                                          
                                                                                                                                
Mr. Brintnell qualified  that if sufficient changes  were made to                                                               
AGIA that allowed "the producers  to see their way to potentially                                                               
make  an application"  Enbridge  would "create  enough value"  to                                                               
become part of the consortium.                                                                                                  
                                                                                                                                
2:35:38 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  requested the witness identify  the sections of                                                               
this  bill  that  were  "troublesome"  to  Enbridge  as  well  as                                                               
solutions. Co-Chair Stedman commented,  "It's easy to tear things                                                               
apart; it's much harder to  build things." Additionally, he asked                                                               
Mr. Brintnell the provisions of AGIA he supported.                                                                              
                                                                                                                                
2:36:21 PM                                                                                                                    
                                                                                                                                
Mr.  Brintnell  agreed, although  expressed  he  was reticent  to                                                               
provide significant detail because Enbridge  did not deem AGIA to                                                               
be necessary. His greatest concern  with the bill was the State's                                                               
"must haves" listed in Section 43.90.130.                                                                                       
                                                                                                                                
2:36:55 PM                                                                                                                    
                                                                                                                                
Mr.  Brintnell   opined  that  this  provision   would  create  a                                                               
situation   in  which   the  Legislature   could  not   have  the                                                               
opportunity  to view  "the most  creative solution,  and the  one                                                               
that may in  fact add more value." An application  that failed to                                                               
comply with one  criterion could offer value in  other forms, but                                                               
would not be considered. This would be a "mistake".                                                                             
                                                                                                                                
2:37:32 PM                                                                                                                    
                                                                                                                                
Senator Huggins,  referencing Page 12 of  the presentation, noted                                                               
the statement that  "Canada would be ready for  this project, but                                                               
claims  of   exclusivity  would  be  denied."   He  requested  an                                                               
explanation.                                                                                                                    
                                                                                                                                
2:37:47 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell asserted,  "There is no exclusive right  to build a                                                               
pipeline in  Canada." Whether the pipeline  was constructed under                                                               
the  provisions of  the Northern  Pipeline Act  or the  NEBC Act,                                                               
would be decided by the shippers and the market.                                                                                
                                                                                                                                
AT EASE 2:38:26 PM / 2:39:01 PM                                                                                             
                                                                                                                                
2:39:32 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  requested an elaboration  of the  argument that                                                               
the project was "too risky -  too big, too complex, too expensive                                                               
- to move forward without producers".  He asked the amount of the                                                               
project that could be financed by the "downstream market".                                                                      
                                                                                                                                
2:39:57 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell  replied that potentially hundreds  of millions and                                                               
possibly  one  half  billion  dollars  could  be  committed  from                                                               
utility companies.  He told of  past dialog between  Enbridge and                                                               
utility companies on  the topic. The actuality  would depend upon                                                               
approval  from  the  regulatory  authorities  that  governed  the                                                               
utility. Utilities  need new gas  supplies; however  they require                                                               
regulatory  approval to  make long  term commitments.  Because of                                                               
the  substantial funds  involved, regulatory  agencies must  give                                                               
applications careful consideration because  "in the end, it's not                                                               
the owners  that necessarily  going to bear  the risk,  it's moms                                                               
and dads."  The utility companies  could increase supply  for its                                                               
customers,  but  if  "they're   wrong"  the  customers  would  be                                                               
required to pay higher rates.                                                                                                   
                                                                                                                                
2:41:31 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  asked the  gross capacity  of one-half  bcf per                                                               
day.                                                                                                                            
                                                                                                                                
2:41:42 PM                                                                                                                    
                                                                                                                                
Mr.  Brintnell  indicated  a  scope of  a  pipeline  capacity  of                                                               
approximately 4.5 bcf per day.  The producers would "step up for"                                                               
the majority of the capacity. The  utilities would not be able to                                                               
"fundamentally  underpin  the  project." Although  the  utilities                                                               
could "top  up" at  the open  season, they  would be  required to                                                               
acquire the transport and the supply.                                                                                           
                                                                                                                                
2:42:34 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman noted the witness  relayed that Enbridge was not                                                               
"100 percent" supportive of the  requirement for rolled-in rates,                                                               
which was  a FERC presumption.  Co-Chair Stedman  understood that                                                               
Canada had  rolled-in rates and  asked the reason  for Enbridge's                                                               
lack of support for this.                                                                                                       
                                                                                                                                
2:43:05 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell informed that the  "three most recent" cross border                                                               
pipelines  constructed  between  the  United  States  and  Canada                                                               
involved  negotiated  rates.  The shippers  negotiated  with  the                                                               
pipeline  companies and  secured  fixed tariffs  or tariffs  that                                                               
excluded  a   rolled-in  presumption.  While  most   of  the  gas                                                               
transported through  Canada was subject to  rolled-in rates, this                                                               
was not indicative of recent negotiations.                                                                                      
                                                                                                                                
2:44:02 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman relayed that  discussions had occurred regarding                                                               
a  gas treatment  plant,  which  would be  necessary  to allow  a                                                               
natural gas pipeline to be "usable".  He asked if Enbridge had an                                                               
interest in owning the gas treatment plant.                                                                                     
                                                                                                                                
2:44:38 PM                                                                                                                    
                                                                                                                                
Mr.  Brintnell   answered  that   the  company  engages   in  gas                                                               
processing.  Much  of  Enbridge's  activities  in  the  Lower  48                                                               
involved gas processing, mostly occurring  in the state of Texas.                                                               
"If  the opportunity  presented itself"  he stated  that Enbridge                                                               
would consider partaking in gas treatment of Alaska natural gas.                                                                
                                                                                                                                
Mr.  Brintnell  understood  preference  to locate  the  plant  in                                                               
Alaska to create  a petrochemical complex and  new industry. This                                                               
was a "laudable goal". However,  the distance from the market was                                                               
substantial  and capacity  was  available in  Alberta, Canada  to                                                               
process  the liquid  gas. As  a resource  owner, the  State could                                                               
find that its ability to  "create greater wealth for the liquids"                                                               
might   entail  selling   the  liquid   in  Canada   rather  than                                                               
construction of new facilities in Alaska.                                                                                       
                                                                                                                                
2:45:51 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell furthered that  the "midstream extraction business"                                                               
was "highly volatile".  Although "things look rosy  today" as few                                                               
as five  years ago, the  situation was not favorable.  Oil prices                                                               
and  gas   prices  fluctuated   and  economically   affected  gas                                                               
treatment operations.                                                                                                           
                                                                                                                                
2:46:10 PM                                                                                                                    
                                                                                                                                
Senator  Huggins  identified the  issue  of  a producer-owned  or                                                               
producer-partnered   pipeline.   The   producers   of   the   gas                                                               
transported  by   the  Alliance   pipeline  initially   had  part                                                               
ownership of  that pipeline with  Enbridge owning 11  percent. As                                                               
the pipeline project progressed,  the producers divested from the                                                               
partnership.                                                                                                                    
                                                                                                                                
2:46:45 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell  affirmed and detailed  that the  Alliance pipeline                                                               
was  the  concept  of  the producers,  intended  to  create  more                                                               
competition for the  transport of the gas from  western Canada to                                                               
Chicago, Illinois.  Enbridge "joined  the process"  and initially                                                               
owned  11 percent  of  the  project. As  the  design process  and                                                               
tariff  negotiations progressed,  the producers  "stepped up"  to                                                               
participate in the  open season along with  Enbridge Utility. The                                                               
producers  eventually determined  that partial  ownership of  the                                                               
pipeline  was no  longer  necessary "to  get  what they  wanted",                                                               
which was  progression of the  pipeline project and  certainty of                                                               
tolls and  tariffs. At  the time the  pipeline was  completed, no                                                               
producers held ownership in the pipeline.                                                                                       
                                                                                                                                
2:48:11 PM                                                                                                                    
                                                                                                                                
Senator   Huggins   asked   Enbridge's  "experience"   with   the                                                               
"boundaries" of debt-equity ratios.  The current language of AGIA                                                               
would  provide for  a ratio  of 70:30,  and suggestions  had been                                                               
made to adjust the ratio to 80:20 or 75:35.                                                                                     
                                                                                                                                
2:48:31 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell replied that the  debt-equity ratio of the Alliance                                                               
pipeline was 70  to 30. This ratio would be  "achievable" for the                                                               
Alaska pipeline  project. The  Maritime pipeline had  a 75  to 25                                                               
debt ratio.                                                                                                                     
                                                                                                                                
                                                                                                                                
2:49:02 PM                                                                                                                    
                                                                                                                                
Senator  Elton asked  if the  witness's  statement that  Enbridge                                                               
would not  submit an application  for the AGIA  license pertained                                                               
only  to the  current  provisions  of the  bill  and whether  the                                                               
company might participate if the language were amended.                                                                         
                                                                                                                                
2:49:37 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell responded  that Enbridge would not  make a proposal                                                               
in which  it was  the sole  owner. The  project must  include the                                                               
participation  of  the producers  at  least  initially as  equity                                                               
owners.  If   the  provisions  of   AGIA  were  modified   to  be                                                               
"palatable" to the producers,  Enbridge would consider submitting                                                               
an application as one part of a consortium.                                                                                     
                                                                                                                                
2:50:30 PM                                                                                                                    
                                                                                                                                
Senator Elton concluded that the  "best possibility" for Enbridge                                                               
participation  would  be  a  scenario   in  which  the  producers                                                               
constructed the pipeline rather than another pipeline company.                                                                  
                                                                                                                                
2:50:53 PM                                                                                                                    
                                                                                                                                
Mr.  Brintnell  affirmed and  reiterated  that  Enbridge did  not                                                               
envision  the  project  progressing without  the  producers.  The                                                               
producers would have to bear the risk.                                                                                          
                                                                                                                                
2:51:33 PM                                                                                                                    
                                                                                                                                
Senator   Elton   clarified   Mr.   Brintnell's   definition   of                                                               
"participation of  a producer"  as an  equity stakeholder  in the                                                               
pipeline.                                                                                                                       
                                                                                                                                
2:52:16 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell  again affirmed and  explained that  in discussions                                                               
with  producers  over several  years  about  the proposed  Alaska                                                               
natural  gas pipeline,  the producers  "want  to be  part of  it"                                                               
because they would bear the  risk as equity owners. The producers                                                               
have  expressed,  "If we're  going  to  be  bearing the  risk  as                                                               
shippers" they  should have  control as  equity owners.  This was                                                               
the  "premise" of  the Alliance  pipeline. The  producers' intent                                                               
was to have input in the development of the pipeline.                                                                           
                                                                                                                                
2:53:36 PM                                                                                                                    
                                                                                                                                
Senator Thomas  spoke to the  witness's concern that  the "market                                                               
may be  moving on" and  asked if  Mr. Brintnell had  an estimated                                                               
timeframe in which this would occur.                                                                                            
                                                                                                                                
2:53:59 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell answered as follows.                                                                                              
                                                                                                                                
     The  reality is  that some  of  that market  [had] moved  on                                                               
     already in terms of some  of the fertilizer plants and other                                                               
     things. The power  plants were moving on. I  think that some                                                               
     of  the   environmental  issues  that  are   coming  to  the                                                               
     forefront will  slow some of  that down.  But you and  I and                                                               
     the rest of the North  America haven't slowed our hunger for                                                               
     power,   for  electricity.   So  it's   going  to   have  to                                                               
     [indiscernible]  somewhere. LNG  may fill  the gap  but it's                                                               
     not the panacea right now either.  I mean two or three years                                                               
     ago, the fear  was Alaska gas has to get  moving because LNG                                                               
     is going to eat its lunch.  The reality is LNG is not moving                                                               
     that fast  either because they're  facing the  same hurdles;                                                               
     the  cost  and labor  and  a  whole  bunch of  other  things                                                               
     including foreign  control. So if  it isn't LNG,  it's going                                                               
     to have to be something else and it may well be coal.                                                                      
                                                                                                                                
2:55:06 PM                                                                                                                    
                                                                                                                                
Senator Thomas next  asked the capacity of  the Alliance pipeline                                                               
and whether  it would have  space available to transport  any gas                                                               
from Alaska.                                                                                                                    
                                                                                                                                
2:55:22 PM                                                                                                                    
                                                                                                                                
Mr.  Brintnell informed  that the  Alliance  pipeline was  "fully                                                               
contracted  and full"  to the  year 2015.  He did  not anticipate                                                               
that gas from Alaska would  be available to transport before that                                                               
date and  production was declining  in Alberta.  Therefore, space                                                               
would be available  and the pipeline would  be "easily expandable                                                               
fairly cheaply" in the future "when the time comes".                                                                            
                                                                                                                                
2:56:10 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  asked  the  "magnitude" of  the  cost  of  the                                                               
Alliance pipeline project.                                                                                                      
                                                                                                                                
2:56:20 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell reported  the cost in US  dollars was approximately                                                               
$5 billion.                                                                                                                     
                                                                                                                                
2:56:27 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman surmised that Enbridge  was therefore capable of                                                               
undertaking a project of the  magnitude of the Alaska natural gas                                                               
pipeline "all else being equal".                                                                                                
                                                                                                                                
2:56:48 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell  requested clarification of the  implied ability to                                                               
construct the pipeline or the financial capability.                                                                             
                                                                                                                                
2:57:02 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  specified  that if  firm  transportation  (FT)                                                               
commitments  were secured  sufficient to  proceed to  application                                                               
for a FERC certificate, Enbridge  would be capable of undertaking                                                               
the project.  Testimony from other  companies had  asserted those                                                               
companies were "the only ones in the world that can build it."                                                                  
                                                                                                                                
2:57:22 PM                                                                                                                    
                                                                                                                                
Mr.  Brintnell   acknowledged  that   Enbridge  would   have  the                                                               
capability to build the Alaska  natural gas pipeline but stressed                                                               
the company  did not have  the "desire" to undertake  the project                                                               
independently. The  project would be too  big. Enbridge's "market                                                               
cap" was  approximately $15 billion  US dollars and  this project                                                               
would be  "a bet  the farm  project if we  were the  sole owner".                                                               
Instead, Enbridge would  likely hold ten to 20  percent equity in                                                               
the pipeline.                                                                                                                   
                                                                                                                                
2:57:49 PM                                                                                                                    
                                                                                                                                
Senator Thomas referenced  Page 3 and the  map depicting Proposed                                                               
Pipeline Development in Canada and  the contiguous United States.                                                               
He directed  attention to a  route marked between  Kimat, British                                                               
Columbia and the state of  California and asked if this reflected                                                               
a proposed natural gas pipeline to central California.                                                                          
                                                                                                                                
2:58:14 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell corrected that the  marking was an indicator of the                                                               
proposed Gateway  project to transport  oil from the  Alberta Tar                                                               
Sands  to offshore  British  Columbia with  some  oil shipped  to                                                               
Asian markets and some shipped to California.                                                                                   
                                                                                                                                
2:58:39 PM                                                                                                                    
                                                                                                                                
Senator Thomas asked  if Alaska natural gas could  be utilized to                                                               
"assist in" this project.                                                                                                       
                                                                                                                                
2:58:45 PM                                                                                                                    
                                                                                                                                
Mr.  Brintnell replied  that that  the  Alberta Tar  Sands had  a                                                               
"growing  need"  for  additional  gas to  produce  oil.  However,                                                               
uncertainty of gas supply also  existed, including uncertainty of                                                               
whether   natural  gas   from  Alaska   would  be   produced  and                                                               
transported. Therefore,  the producers operating in  Alberta were                                                               
considering alternatives.                                                                                                       
                                                                                                                                
2:59:16 PM                                                                                                                    
                                                                                                                                
Senator  Thomas  next noted  the  two  year time  period  between                                                               
application for  the FERC certificate  for the  Alliance pipeline                                                               
and issuance  of the  certificate as demonstrated  on Page  4. He                                                               
asked the  "overall" timeframe between  the "serious  concept" of                                                               
the project and construction completion.                                                                                        
                                                                                                                                
2:59:45 PM                                                                                                                    
                                                                                                                                
Mr.  Brintnell answered  that  he would  research  and provide  a                                                               
response.                                                                                                                       
                                                                                                                                
2:59:54 PM                                                                                                                    
                                                                                                                                
Senator   Thomas  recalled   the  witness   testified  that   the                                                               
construction period was approximately two years.                                                                                
                                                                                                                                
3:00:00 PM                                                                                                                    
                                                                                                                                
Mr. Brintnell  stated that calculation  of the total  time period                                                               
would require a definition of "serious concept".                                                                                
                                                                                                                                
3:00:12 PM                                                                                                                    
                                                                                                                                
Co-Chair   Stedman   requested   Mr.   Brintnell   expedite   his                                                               
identification of the "positive aspects" of the AGIA legislation                                                                
as well as suggested language changes.                                                                                          
                                                                                                                                
AT EASE 3:00:37 PM / 3:02:07 PM                                                                                             
                                                                                                                                
3:03:06 PM                                                                                                                    
                                                                                                                                
BRIAN WENZEL, Vice President, Alaska North Slope Gas                                                                            
Commercialization, ConocoPhillips, introduced himself and gave                                                                  
the following testimony.                                                                                                        
                                                                                                                                
3:03:33 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel:                                                                                                                     
                                                                                                                                
     Although ConocoPhillips supports and  very much applauds the                                                               
     Governor  for  her  efforts  to  move  the  gasline  project                                                               
     forward we do not support  AGIA as originally introduced. We                                                               
     do  not  support  the  CS  [committee  substitute]  recently                                                               
     adopted by Senate Judiciary.                                                                                               
     Rather  we believe  that  AGIA needs  a  critical change;  a                                                               
     change  in approach.  AGIA  should be  changed  to allow  an                                                               
     applicant  to submit  an  application  that achieves  AGIA's                                                               
     intent but does  so with a different mix  of commitments and                                                               
     terms and conditions.                                                                                                      
     As a potential  applicant, we need the ability  to propose a                                                               
     comprehensive  package -  including critical  resource terms                                                               
     that  I'll  talk  about  in   a  moment  -  a  package  that                                                               
     appropriately balances the risk  and returns associated with                                                               
     the  project while  still  providing  the necessary  maximum                                                               
     benefits to Alaska.                                                                                                        
                                                                                                                                
3:04:33 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel continued.                                                                                                           
                                                                                                                                
     Now let me be clear  that from ConocoPhillips' standpoint we                                                               
     very much want  to develop our ANS [Alaska  North Slope] gas                                                               
     resources.  If  we collectively  can  find  a way  with  the                                                               
     legislature,  with the  Administration, with  the public  of                                                               
     Alaska, to  make this project economic,  those gas resources                                                               
     will be developed.                                                                                                         
                                                                                                                                
3:04:55 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel cautioned the following.                                                                                             
                                                                                                                                
     But conversely,  if our upstream  resources - the  terms for                                                               
     developing our  upstream gas resources -  are not sufficient                                                               
     to make the project economic, it won't get developed.                                                                      
     We need  to find a  way to  essentially balance the  risks -                                                               
     the massive  risks -  associated with  this project  and the                                                               
    development of those resources with the needs of Alaska.                                                                    
                                                                                                                                
3:05:28 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel shared:                                                                                                              
                                                                                                                                
     The real question in my mind,  the real question before us I                                                               
     believe, is  not "what does it  take to make a  gas pipeline                                                               
     happen".  Rather, I  think the  real question  before us  is                                                               
     "how  do  we  make  sure that  Alaska's  gas  resources  are                                                               
     developed."                                                                                                                
     We believe there's  been too much focus on  the pipeline and                                                               
     not  enough focus  on  the upstream  fiscal  terms that  are                                                               
     necessary  to  make  the   development  of  those  resources                                                               
     economic.                                                                                                                  
     We should  all be focused  on the upstream, on  the resource                                                               
     side, where  the vast majority  of the project risk  lies. I                                                               
     thing you've  had prior testimony  and it's  definitely come                                                               
     up before other committees about  the nature of this project                                                               
     and how  this project will  get presented and  put together.                                                               
     The  fact that  not only  does the  geologic risk  - to  the                                                               
     extent  there  is any  risk  with  the  upstream -  but  the                                                               
     upstream  infrastructure risk  ,  the price  risk, the  mid-                                                               
     stream,  the pipeline  infrastructure cost  risk, lies  with                                                               
     the upstream.                                                                                                              
                                                                                                                                
3:06:32 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel emphasized:                                                                                                          
                                                                                                                                
     The vast majority  of all risk associated  with this project                                                               
     of  developing   ANS  gas  resources  will   rest  with  the                                                               
     upstream. We need to understand  those upstream fiscal terms                                                               
     such  that  we can  assure  ourselves  that the  project  is                                                               
     economic.                                                                                                                  
                                                                                                                                
3:06:48 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel offered the following.                                                                                               
                                                                                                                                
     One  way to  essentially come  to ground  on those  upstream                                                               
     fiscal terms would  be to enter into a  dialog, a discussion                                                               
     around our needs, our objectives  and those of the State. In                                                               
     fact you've  heard not  only the producers  but many  of the                                                               
     third-party pipeline companies indicate  [that] we've got to                                                               
     solve the  upstream resource issues  first and  the pipeline                                                               
     project gets much easier.                                                                                                  
     From  ConocoPhillips' standpoint,  we  definitely agree.  We                                                               
     believe the best way to  resolve these upstream fiscal terms                                                               
     is to sit down and have that dialog.                                                                                       
                                                                                                                                
3:07:31 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel qualified:                                                                                                           
                                                                                                                                
     Now  admittedly  that  dialog,  that  discussion,  has  been                                                               
     characterized   as   just   another   negotiation   by   the                                                               
     Administration.   AGIA   is   not  about   negotiation.   We                                                               
     understand that.                                                                                                           
     By the  same token,  the Administration has  indicated there                                                               
     unwillingness  to  discuss and  adjust  the  upstream -  the                                                               
     resource terms. So it seems  this first avenue for resolving                                                               
     the  appropriate  fiscal  structure  for  the  resources  is                                                               
     closed.                                                                                                                    
                                                                                                                                
3:08:03 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel continued:                                                                                                           
                                                                                                                                
     So then  we turn  to maybe a  second alternative  to resolve                                                               
     the necessary upstream resource terms,  and that would be to                                                               
     essentially  ask the  business decision  makers -  those who                                                               
     need to  make the investment  and develop these  resources -                                                               
     to put  on the  table, a comprehensive  proposal of  what it                                                               
     takes  in terms  of resource  terms and  pipeline terms,  to                                                               
     make this project a reality.                                                                                               
                                                                                                                                
3:08:30 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel made the following remark.                                                                                           
                                                                                                                                
     Unfortunately AGIA  does not provide that  flexibility. AGIA                                                               
     stipulates the  exact upstream resource terms,  in a limited                                                               
     fashion,  that are  available.  Again  as indicated,  [AGIA]                                                               
     provides  no  flexibility  for an  applicant  to  propose  a                                                               
     different set of resource terms.                                                                                           
                                                                                                                                
3:08:53 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel summarized:                                                                                                          
                                                                                                                                
     So again with the two  best methods for resolving this issue                                                               
     - for  resolving the necessary  changes to the  fiscal terms                                                               
     for  the resource  side -  you can  appreciate the  quandary                                                               
     we're in, in  terms of how to proceed with  the project; how                                                               
     to move this forward.                                                                                                      
                                                                                                                                
3:09:13 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel informed:                                                                                                            
                                                                                                                                
     Now I'll  admit at the  same time that  we have many  of the                                                               
     same  concerns that  you  heard presented  to  you, I  think                                                               
     yesterday, by BP around some  of the other issues with AGIA.                                                               
     I don't  want to discount those.  But at the same  time, for                                                               
     us the heart of the issue  is how do we get comfortable with                                                               
     the upstream resource terms.                                                                                               
     The inadequate  resource terms stipulated  in this  piece of                                                               
     legislation  causes the  uncertainties  associated with  the                                                               
     project  to outweigh  the potential  returns.  That in  turn                                                               
     prevents  ConocoPhillips  from  participating  in  the  AGIA                                                               
     process.                                                                                                                   
                                                                                                                                
3:09:52 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel asserted:                                                                                                            
                                                                                                                                
     If  AGIA is  not changed,  we will  not be  able to  make an                                                               
     application under  the AGIA process. I  said more generally,                                                               
     the lack of flexibility  in AGIA will prevent ConocoPhillips                                                               
     from making an AGIA application.                                                                                           
                                                                                                                                
3:10:11 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel communicated:                                                                                                        
                                                                                                                                
     I  also want  to  address a  claim that  came  up just  this                                                               
     morning in the paper  where an Administration representative                                                               
     suggested the  return on  this project was  in excess  of 50                                                               
     percent. I have  to tell you from my  standpoint, looking at                                                               
     internal project  models; I've never  seen a return  on this                                                               
     integrated  project anywhere  close to  50 percent.  In fact                                                               
     again  my  problem  is  rather   that  the  returns  on  the                                                               
     integrated project  are closer to  zero than they are  to 50                                                               
     percent.                                                                                                                   
     Our problem is the project  as described through AGIA is not                                                               
     economically viable. We need different fiscal terms.                                                                       
     The claims  that the project  is wildly economic  are simply                                                               
     misleading.  This  project is  not  wildly  economic. If  it                                                               
     were, it would be moving ahead.                                                                                            
     The claims that  it's wildly economic are based on  a set of                                                               
     assumptions, which no one can  guarantee. They're also based                                                               
     on   an  assumption   that  $100   billion  plus   financial                                                               
     commission   can  be   ignored  when   doing  your   project                                                               
     economics.                                                                                                                 
                                                                                                                                
3:11:22 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel advised:                                                                                                             
                                                                                                                                
     I  would urge  you  to  be very  careful  about  the set  of                                                               
     assumptions  behind  the claims  of  the  economics of  this                                                               
     project.                                                                                                                   
     At the same time, if any  one can step up and guarantee some                                                               
     of those assumptions, this project's  ready to go. No doubt.                                                               
     If  we  could guarantee  gas  prices  will always  be  high,                                                               
     capital costs  will never increase,  gas will  discovered in                                                               
     sufficient quantities to fill  this pipeline, this project's                                                               
     ready to go.                                                                                                               
                                                                                                                                
3:11:55 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel characterized the aforementioned:                                                                                    
                                                                                                                                
     Those  are  the very  risks  that  we  as producers  of  gas                                                               
     lessees need  to get  comfortable with  in order  to advance                                                               
     this project.                                                                                                              
                                                                                                                                
3:12:09 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel reiterated:                                                                                                          
                                                                                                                                
     Again from our  standpoint we need to address  some of those                                                               
     key  risks  and  try  to mitigate  those  with  an  upstream                                                               
     resource  fiscal package  to help  us  advance the  project.                                                               
     That the  easiest way for  the State to help  mitigate those                                                               
     risks.                                                                                                                     
                                                                                                                                
3:12:27 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel pointed out the following.                                                                                           
                                                                                                                                
     Now resource risk has always  posed the greatest obstacle to                                                               
     a  gas  pipeline.  Long  term clarity  on  State  taxes  and                                                               
     royalties is critically important to reducing those risks.                                                                 
                                                                                                                                
3:12:45 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel relayed:                                                                                                             
                                                                                                                                
     The other thing  I wanted to delve into a  little bit is our                                                               
     other concerns on AGIA. You  may have had the opportunity to                                                               
     hear my  college, Wendy King, testify  on numerous occasions                                                               
     over the  last few weeks  on AGIA. She  repeatedly indicated                                                               
     that ConocoPhillips is very concerned  with the AGIA process                                                               
     and   the  overly   prescriptive   approach.  She   strongly                                                               
     suggested that  a mechanism be  introduced into the  bill to                                                               
     allow  for resource  lessees to  propose alternate  resource                                                               
     terms. She's recommended that  the Committee make amendments                                                               
     to change AGIA's bid requirements  to bid variables or broad                                                               
     objectives to  provide the flexibility  for an  applicant to                                                               
     respond  to those  variables or  those objectives  in a  way                                                               
     that  presents   the  best   package  proposal.   And  she's                                                               
     frequently  warned  about  the dangers  of  the  exclusivity                                                               
     provisions that  exist within  AGIA and  the danger  that it                                                               
     could hamstring  the State's ability to  advance the project                                                               
     in the  event that a licensee  is chosen who cannot  or will                                                               
     not advance the project for some reason.                                                                                   
     Behind  all  of  her  testimony, lay  numerous  issues  that                                                               
     concern  us within  AGIA. There  are rigid  deadlines, there                                                               
     [are]  requests for  initial  shippers  to subsidize  future                                                               
     shippers  or   subsidize  third-party   pipeline  companies.                                                               
     [AGIA]  requires  the waiving  our  due  process rights.  It                                                               
     requires parties  to accept FERC certifications  without the                                                               
     ability to negotiate any conditions on those certs.                                                                        
     There's a requirement that makes  all project changes to the                                                               
     project  subject to  State approval  and control.  And again                                                               
     most  importantly, AGIA  as  structured provides  inadequate                                                               
     clarity and predictability around resource terms.                                                                          
                                                                                                                                
3:14:46 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel posed:                                                                                                               
                                                                                                                                
     In   the  end   all   of  our   suggestions  and   concerns,                                                               
     recommendations can  be boiled down  to a request  that AGIA                                                               
     be  changed  sufficiently  that   we  can  submit  our  best                                                               
     proposal and know  that it won't be  rejected simply because                                                               
     it doesn't  meet all  of the exact  requirements -  the must                                                               
     haves, the terms and conditions of AGIA.                                                                                   
     As currently drafted  AGIA would require that  a proposal be                                                               
     rejected immediately  if it doesn't  exactly meet  the terms                                                               
     and conditions of AGIA.                                                                                                    
     The Administration  has indicated that if  AGIA process does                                                               
     not produce enough bids or  bids of sufficient quality, that                                                               
     they'll repeat  the process; we'll  start over. Our  view is                                                               
     that  both we  as  producers, you  as  the Legislature,  the                                                               
     Alaskans, do not have the latitude  - can't afford to wait a                                                               
    year to see if we get enough bids or get the right bids.                                                                    
     Rather we  should find  a way to  make the  process flexible                                                               
     enough to make sure all bids  come in up front; all bids are                                                               
     put on the table and evaluated.                                                                                            
     We're  not  suggesting ours  will  be  the only  bid.  We're                                                               
     suggesting  we want  our bid  on the  table. We  want to  be                                                               
     evaluated and considered  next to all other  bids upfront as                                                               
     opposed in some later iteration.                                                                                           
                                                                                                                                
3:16:09 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel expressed the following position of ConocoPhillips.                                                                  
                                                                                                                                
     We believe that if AGIA - if  the AGIA process - is truly to                                                               
     allow open  and transparent  competition it will  allow each                                                               
     applicant   to   propose   a  set   of   work   commitments,                                                               
     inducements,  terms  and  conditions, which  that  applicant                                                               
     believes are best for all stakeholders.                                                                                    
     In such an arena, where AGIA  has been changed, we will bid.                                                               
     We  will  put on  the  table  our  best proposal,  which  we                                                               
     believe best meets the needs of Alaska.                                                                                    
                                                                                                                                
3:16:36 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel:                                                                                                                     
                                                                                                                                
     And in  terms of the process  forward, I also want  to point                                                               
     out  in ConocoPhillips'  view the  most efficient,  the most                                                               
     expeditious   way   forward   on   this   project   is   for                                                               
     ConocoPhillips to  work with BP  and Exxon Mobil  to advance                                                               
     this  project.  We  can't  ignore   the  expertise  and  the                                                               
     knowledge of these three producers.  That consortium, in our                                                               
     view, needs  to be the key  or the core behind  our proposal                                                               
     through AGIA  if and when  AGIA is  adjusted to allow  us to                                                               
     bid.                                                                                                                       
                                                                                                                                
3:17:16 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel announced:                                                                                                           
                                                                                                                                
     At  the same  time  we've also  indicated,  not only  before                                                               
     various committees, but also to  other entities, that we are                                                               
     open to the  possibility of including other  entities in our                                                               
     consortium bid.  To the extent  that there are  entities out                                                               
     there  - be  they  third-party pipeline  companies or  other                                                               
     entities -  who bring  meaningful additions to  our proposal                                                               
     to the  table, we're happy  to include those.  For instance,                                                               
     to  the  extent that  there  are  entities who  could  bring                                                               
     better ways  to mitigate  risk; better particular  assets to                                                               
     the table,  cash -  cash is  always welcome  - all  of these                                                               
     things.  There are  other assets  that other  entities could                                                               
     bring to the table and  provide a meaningful contribution to                                                               
     a joint proposal.                                                                                                          
                                                                                                                                
3:18:12 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel began his summarization as follows.                                                                                  
                                                                                                                                
     In  closing, ConocoPhillips  very much  want to  develop our                                                               
     ANS gas  resources. We want to  do that by winning  the AGIA                                                               
     license  and  constructing  the  ANS  gasline.  We  want  to                                                               
     participate  in this  process and  truly compete  by putting                                                               
     our  best   proposal  on   the  table   for  administrative,                                                               
     legislative and public review.                                                                                             
     However, in  order to get that  proposal on the table  - and                                                               
     in fact  other creative proposals  on the table -  up front,                                                               
     AGIA  needs to  be  amended to  allow  and indeed  encourage                                                               
     applicants to submit their very  best proposal regardless of                                                               
     whether it actually  conforms to each of  the requirements -                                                               
     the must haves, the terms and conditions of AGIA.                                                                          
                                                                                                                                
3:19:02 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel informed:                                                                                                            
                                                                                                                                
     Neither  the  producers,  nor the  Legislature,  nor  Alaska                                                               
     itself,  want  another  delay  that  might  from  an  overly                                                               
     prescriptive process.                                                                                                      
     We need to encourage the  greatest quantity and the greatest                                                               
     quality  of bids  in this  first  bid process.  We need  all                                                               
     proposals on the table and open for review.                                                                                
                                                                                                                                
3:19:25 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel concluded his presentation as follows.                                                                               
                                                                                                                                
     We  believe  that  Alaska   deserves  to  see  comprehensive                                                               
     proposals  from companies  that are  already doing  business                                                               
     here in Alaska and have  the expertise and resources to make                                                               
     the project happen.                                                                                                        
     Alaska   deserves   to   see    the   best   proposals.   At                                                               
     ConocoPhillips,  we  believe we  can  make  a proposal  that                                                               
     gives Alaska  a project with  the most jobs and  the highest                                                               
     revenues.                                                                                                                  
     But most  of all, at this  stage of the process,  we want to                                                               
     be able to  compete. We want to be able  to put our proposal                                                               
     on the table and know that it won't be rejected.                                                                           
     In order  for us  to do  that, AGIA needs  to be  amended to                                                               
     allow bidders to  address the total risks of  the project by                                                               
     proposing a comprehensive package including resource terms.                                                                
                                                                                                                                
3:20:22 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman commented on  the appearance that ConocoPhillips                                                               
was  "reluctant"  to  become  an   applicant  under  the  current                                                               
provisions of  AGIA. He requested that  the provisions considered                                                               
problematic by the company be  identified and that suggestions of                                                               
solutions be proposed. He  sought constructive recommendations to                                                               
advance the project.                                                                                                            
                                                                                                                                
3:21:18 PM                                                                                                                    
                                                                                                                                
Mr.  Wenzel responded  that ConocoPhillips  had suggested  during                                                               
previous hearings  in other committees, various  methods to amend                                                               
the  bill. He  offered to  provide those  recommendations to  the                                                               
Senate  Finance Committee.  However, the  "volume of  the changes                                                               
required to  allow us  to bid,  to deal  with the  flexibility we                                                               
need to put  a competitive viable economic project  on the table,                                                               
is so  great that  we fear  it can't  be dealt  with in  the time                                                               
allowed."  Consequently, his  testimony was  intended to  instead                                                               
suggest  "another way,  which is  to focus  on amendments,  which                                                               
would allow the flexibility for [an]  applicant to come in with a                                                               
new mix of terms and conditions and commitments."                                                                               
                                                                                                                                
3:22:16 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman spoke  to the  witness's mention  of cash.  The                                                               
State would  offer $500 million  to further the AGIA  process. He                                                               
was  "getting mixed  signals" in  reaction to  this proposal  and                                                               
asked if ConocoPhillips was "interested"  in this incentive if it                                                               
were to apply for the AGIA license.                                                                                             
                                                                                                                                
3:22:40 PM                                                                                                                    
                                                                                                                                
Mr.  Wenzel  answered,  "Respectfully  yes."  The  company  would                                                               
always  accept cash  contributions. However,  this incentive  was                                                               
not in the  best interest of Alaska nor would  it be necessary in                                                               
a competitive bidding process. Rather  the State should obtain an                                                               
equity position as its contribution.                                                                                            
                                                                                                                                
3:23:25 PM                                                                                                                    
                                                                                                                                
Senator  Elton  understood  the Mr.  Wenzel  spoke  in  "umbrella                                                               
terms"  given  his determination  that  the  amount of  necessary                                                               
changes  to  the bill  was  significant.  However, the  testimony                                                               
supported  a  "default"  to   the  proposed  contract  negotiated                                                               
between ConocoPhillips,  BP and  Exxon Mobile, and  the Murkowski                                                               
Administration and rejected by  the previous legislature. Senator                                                               
Elton  asked  how  an  application under  the  terms  Mr.  Wenzel                                                               
suggested would differ.                                                                                                         
                                                                                                                                
3:24:31 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel  replied that the  involvement of  competitive bidding                                                               
would be the "critical" difference.  His proposal would allow the                                                               
State to benefit from an  environment in which ConocoPhillips, BP                                                               
and  Exxon  Mobile, if  the  companies  formed a  consortium  and                                                               
submitted an  application, would  be required to  compete against                                                               
bids from other  entities. The consortium would  have to consider                                                               
the possible  incentives and  commitments other  applicants would                                                               
propose.  However,  each  applicant  would  have  the  option  of                                                               
proposing the best possible project.                                                                                            
                                                                                                                                
3:25:30 PM                                                                                                                    
                                                                                                                                
Senator   Elton  asked   if  AGIA   was  amended   favorably  for                                                               
ConocoPhillips,  whether the  witness expected  that the  company                                                               
would  submit  an  application package  that  included  specifics                                                               
relating to taxes  and other conditions needed  to accomplish the                                                               
pipeline.                                                                                                                       
                                                                                                                                
3:25:57 PM                                                                                                                    
                                                                                                                                
Mr.  Wenzel affirmed  that the  objective  would be  "to stay  as                                                               
close as  possible to the  original terms  of AGIA" and  that the                                                               
only variations would be those  necessary to ensure a competitive                                                               
project  and  that were  acceptable  to  the company's  board  of                                                               
directors.                                                                                                                      
                                                                                                                                
3:26:33 PM                                                                                                                    
                                                                                                                                
Senator  Elton repeated  his question,  asking if  ConocoPhillips                                                               
would submit a bid that  included resource tax structures for oil                                                               
and gas.                                                                                                                        
                                                                                                                                
3:26:39 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel answered, "Yes we would definitely."                                                                                 
                                                                                                                                
3:26:44 PM                                                                                                                    
                                                                                                                                
Senator Dyson posed a scenario  in which an applicant was allowed                                                               
to  submit two  bids, one  that complied  with the  conditions of                                                               
AGIA and  another that  the applicant  determined would  meet its                                                               
goals "but had better ways of doing it."                                                                                        
                                                                                                                                
3:27:14 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel  would not  oppose a  provision to  submit one  or two                                                               
applications "so long as we could do either-or".                                                                                
                                                                                                                                
3:27:19 PM                                                                                                                    
                                                                                                                                
Senator Dyson  clarified that an  application compliant  with the                                                               
AGIA terms  would be required  before a  noncompliant application                                                               
would be accepted.                                                                                                              
                                                                                                                                
3:27:30 PM                                                                                                                    
                                                                                                                                
Mr.  Wenzel  expressed  concern that  the  conforming  bid  would                                                               
propose  a non-economic  project that  could not  be financed  or                                                               
completed.                                                                                                                      
                                                                                                                                
3:27:57 PM                                                                                                                    
                                                                                                                                
Senator  Dyson  asked if  ConocoPhillips  was  involved with  any                                                               
projects  located  in  North  America  that  had  the  degree  of                                                               
upstream fiscal certainty that was requested of AGIA.                                                                           
                                                                                                                                
3:28:18 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel answered  in the negative. The  outstanding element of                                                               
the Alaska natural gas pipeline  project was its "absolute size".                                                               
Additionally, the company operated in  no other location in North                                                               
America that  has a "regime where  it is so dependant  on oil and                                                               
gas   revenues   for   its  future"   earnings.   He   recognized                                                               
ConocoPhillips' responsibility  to provide revenue for  the State                                                               
for the  long term and  the issues  that would arise  "should the                                                               
State run short of funds."                                                                                                      
                                                                                                                                
3:28:59 PM                                                                                                                    
                                                                                                                                
Senator Dyson announced,  "I just heard him say  that they've got                                                               
us over their hip because we've got to have the money."                                                                         
                                                                                                                                
3:29:13 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel viewed  the situation in reverse as "the  State has us                                                               
over the hip."                                                                                                                  
                                                                                                                                
3:29:20 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman referenced a letter  from dated July 24, 2006 to                                                               
former  Commissioner Bill  Corbus  of the  Department of  Revenue                                                               
from  Shell  Exploration  and  Production  [copy  on  file]  that                                                               
included the  topic of  FERC regulations  and the  presumption of                                                               
rolled-in  rates. He  cited from  the  letter, "FERC  regulations                                                               
should  not  be  prospectively  limited  or  conditioned  in  any                                                               
contract  or  other  agreement  with the  State  of  Alaska."  He                                                               
understood  that Shell  would not  be an  applicant for  the AGIA                                                               
license partially  due to  concerns on this  issue. He  asked the                                                               
concerns of ConocoPhillips as a resource holder.                                                                                
                                                                                                                                
3:30:19 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel  replied that ConocoPhillips did  not oppose rolled-in                                                               
rates. It  was supportive of  FERC regulations and  its continued                                                               
regulation  of the  "appropriate tariffs".  The FERC  process was                                                               
"very established".                                                                                                             
                                                                                                                                
3:30:52 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman indicated  that his  question was  not answered                                                               
explaining that language in the bill pertained to "appeal".                                                                     
                                                                                                                                
3:30:59 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel deferred to Ms. King.                                                                                                
                                                                                                                                
3:31:04 PM                                                                                                                    
                                                                                                                                
WENDY  KING,   Manager,  Alaska  North  Slope   Gas  Development,                                                               
ConocoPhillips, testified  to the concern expressed  on the issue                                                               
of rolled-in rates. The FERC  adopted regulations to provide that                                                               
it would have  a "rebutable presumption of rolled in  rates up to                                                               
the  point that  there was  a subsidy."  The current  language of                                                               
AGIA would  limit a pipeline  entity and shipper  from "proposing                                                               
an incremental  rate if  they believe that  there is  a subsidy."                                                               
FERC  was the  "appropriate  adjudicator" of  issues relating  to                                                               
subsidies.                                                                                                                      
                                                                                                                                
3:32:21 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman next spoke to the  debt to equity ratio of 70:30                                                               
percent.  The State  preferred a  lower tariff.  By lowering  the                                                               
equity requirement, the tariff could  be reduced. He asked if the                                                               
ratio should be changed to 60:40 percent or 80:20 percent.                                                                      
                                                                                                                                
3:32:53 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel  opined that the  State should not stipulate  the debt                                                               
to  equity ratio,  but rather  set  a preference  for "more  debt                                                               
where  possible". The  State should  recognize the  difficulty to                                                               
secure  financing  for  this  project.   The  licensee  would  be                                                               
required to utilize "every possible  lender out there" to finance                                                               
a project  of its size. The  licensee would not have  latitude to                                                               
require  a specific  debt  to equity  ratio.  The licensee  would                                                               
possibly  be  required  utilize  a  different  ratio  for  tariff                                                               
purposes than the actual ratio.  This represented a "commercially                                                               
unreasonable situation".                                                                                                        
                                                                                                                                
3:33:58 PM                                                                                                                    
                                                                                                                                
Ms. King  identified the greatest  variable that  would influence                                                               
the toll was the capital cost  of the project. She reiterated Mr.                                                               
Wenzel's  recommendation to  provide the  maximum flexibility  to                                                               
allow  the  "most  financially   reasonable  financing"  for  the                                                               
project.                                                                                                                        
                                                                                                                                
3:34:32 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman recounted  the intent  of the  proposed project                                                               
negotiated by the  previous Administration, included an  80 to 20                                                               
percent debt to equity ratio.                                                                                                   
                                                                                                                                
3:34:59 PM                                                                                                                    
                                                                                                                                
Ms. King affirmed  "in the context of our  intent." She explained                                                               
the intent  to utilize  the federal  loan guarantees,  which were                                                               
"drafted"  with an  objective of  80 percent  debt to  20 percent                                                               
equity. However,  uncertainties existed as to  the implementation                                                               
of  the federal  loan  guarantees. ConocoPhillips  had intent  to                                                               
qualify for the loan guarantees  and therefore comply with the 80                                                               
to 20 percent ratio.                                                                                                            
                                                                                                                                
3:35:46 PM                                                                                                                    
                                                                                                                                
Senator Huggins  utilized the assumption  of the project  cost of                                                               
$25 billion with  gas production commencing in the  year 2020. He                                                               
recalled  testimony that  without  the gas  treatment plant,  the                                                               
tariff  was predicted  to be  $1.65. He  asked the  "bandwidth of                                                               
desired, predicted, hopefully-will-be, tariff".                                                                                 
                                                                                                                                
3:36:21 PM                                                                                                                    
                                                                                                                                
Ms. King  reminded of previous  testimony in which  she indicated                                                               
ConocoPhillips would  utilize a "gated decision  making process".                                                               
As the project  continued to advance, the cost  estimate would be                                                               
updated. Currently the cost estimate  was uncertain. She recalled                                                               
"the previously public  figure back in 2002 was a  total of about                                                               
$2.00 to  $2.40" depending on  the calculation of the  gas units.                                                               
Steel and labor costs had  increased, and the toll could actually                                                               
be $3  to $4. Further engineering  must be conduced and  a better                                                               
indication of  the financing and  capital costs must  be obtained                                                               
prior  to the  first open  season. At  open season  parties would                                                               
"make a best estimate" of the toll.                                                                                             
                                                                                                                                
3:37:37 PM                                                                                                                    
                                                                                                                                
Senator Huggins asked  if the $3.00 tariff  estimate included gas                                                               
treatment.                                                                                                                      
                                                                                                                                
3:37:48 PM                                                                                                                    
                                                                                                                                
Ms. King responded that toll  figures included "GTP, the mainline                                                               
to the Alaska/Canada border, includes  to Alberta and also to the                                                               
Lower 48".  She furthered, "It  is a  necessary cost to  get that                                                               
gas moved  from the markets  in Alberta to  [the] Lower 48  so we                                                               
include all in cost estimates in the calculation of the toll."                                                                  
                                                                                                                                
3:38:06 PM                                                                                                                    
                                                                                                                                
Senator Huggins expressed  concern that the amount  was twice the                                                               
amount  quoted to  the  Committee by  the  Department of  Natural                                                               
Resources,  although it  excluded the  gas treatment  plant. This                                                               
"further  underscores"  the  uncertainty  of  the  tariff  amount                                                               
despite modeling efforts.                                                                                                       
                                                                                                                                
3:38:44 PM                                                                                                                    
                                                                                                                                
Senator Thomas referenced Mr. Wenzel's  complaints about the lack                                                               
of flexibility  and asked if  issues other than  those identified                                                               
in response to Senator Elton's query existed.                                                                                   
                                                                                                                                
3:39:12 PM                                                                                                                    
                                                                                                                                
Mr.  Wenzel  added   the  concern  about  "the   clarity  of  the                                                               
predictability  of upstream  resource  terms".  He specified  the                                                               
"absolute production tax  rate" and the stability  of those rates                                                               
over a period of time.                                                                                                          
                                                                                                                                
3:39:30 PM                                                                                                                    
                                                                                                                                
Senator  Thomas reviewed  the  provisions  of Section  43.90.140.                                                               
Initial  application  review;  additional  information  requests;                                                               
complete   applications,  and   Section  43.90.150.   Proprietary                                                               
information  and   trade  secrets,   as  well  as   the  language                                                               
pertaining  to  the initial  application  review,  and failed  to                                                               
understand "that  concrete of a  rejection of any  proposal based                                                               
on such rigid details that are  defined in the items." Instead he                                                               
considered  the  provisions  to   contain  many  similarities  to                                                               
provisions of most requests for  proposals (RFP). He acknowledged                                                               
that the Alaska natural gas  pipeline was larger than any project                                                               
for which he had reviewed an  RFP. The intent of this legislation                                                               
was to  minimize potential problems  and to address matters  in a                                                               
"shorter period  of time".  He cautioned  against "getting  it so                                                               
off track with  too many incidentals or small  things that people                                                               
would  like  to see  fixes  but  may  not  necessarily be  a  big                                                               
problem."                                                                                                                       
                                                                                                                                
3:41:04 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel  informed that the  upstream resource  terms addressed                                                               
in  the provisions  of the  bill relating  to inducements,  "were                                                               
very prescribed" and "hard fixed in  AGIA" with no ability for an                                                               
applicant   to  propose   different   inducements  or   different                                                               
certainty on  State taxes. Potential applicants  need the ability                                                               
to  adjust   "some  of  the   terms  of  AGIA,  never   mind  the                                                               
requirements." The requirements were also an issue.                                                                             
                                                                                                                                
Senator Thomas understood Mr.  Wenzel's original concern. Senator                                                               
Thomas reminded that he had posed two separate questions.                                                                       
                                                                                                                                
3:41:46 PM                                                                                                                    
                                                                                                                                
Senator  Elton posed  a scenario,  in which  AGIA was  amended as                                                               
suggested  to provide  for a  competitive  process without  rigid                                                               
guidelines,  and  ConocoPhillips  submitted  an  application  but                                                               
failed to  be awarded the AGIA  license; an open season  was held                                                               
and   ConocoPhillips   did   not   participate;   then,   without                                                               
exclusivity, ConocoPhillips had the  option to leverage the State                                                               
to "get  what you want".  He requested assurance that  this would                                                               
never occur.                                                                                                                    
                                                                                                                                
3:42:43 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel disagreed with  the characterization of ConocoPhillips                                                               
leveraging  the  State.  He  proposed   that  the  AGIA  licensee                                                               
selected  through the  competitive process,  regardless of  whom,                                                               
should be able  to compete with any project.  The licensee should                                                               
be forced to  always be competitive against  other projects. This                                                               
would be  in the best  interest of  Alaska. He expected  that the                                                               
licensee  would have  an  advantage given  that  its project  was                                                               
started first.  If ConocoPhillips  were granted the  AGIA license                                                               
under  the  aforementioned scenario,  he  assured  that it  would                                                               
continue to compete if other projects were proposed.                                                                            
                                                                                                                                
3:43:33 PM                                                                                                                    
                                                                                                                                
Senator Elton opined  that, "one ways you  would demonstrate that                                                               
is   [to]  not   participate  in   [the]  open   season"  because                                                               
ConocoPhillips' project  would be more tangible  than the project                                                               
sponsored under AGIA.                                                                                                           
                                                                                                                                
3:43:52 PM                                                                                                                    
                                                                                                                                
Mr. Wenzel asserted  that the decision to participate  in an open                                                               
season would be dependant upon  whether ConocoPhillips deemed the                                                               
project  economically  viable.  The company  would  evaluate  and                                                               
determine  if the  risks were  offset by  the potential  returns.                                                               
This effort would be undertaken regardless of the project.                                                                      
                                                                                                                                
The bill was HELD in Committee.                                                                                                 
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Bert Stedman adjourned the meeting at 3:45:05 PM                                                                     

Document Name Date/Time Subjects