Legislature(2013 - 2014)HOUSE FINANCE 519
04/16/2014 08:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB178 | |
| SB169 | |
| SB138 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 178 | TELECONFERENCED | |
| += | SB 169 | TELECONFERENCED | |
| += | SB 138 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 191 | TELECONFERENCED | |
CS FOR SENATE BILL NO. 138(FIN) am
"An Act relating to the purposes, powers, and duties
of the Alaska Gasline Development Corporation;
relating to an in-state natural gas pipeline, an
Alaska liquefied natural gas project, and associated
funds; requiring state agencies and other entities to
expedite reviews and actions related to natural gas
pipelines and projects; relating to the authorities
and duties of the commissioner of natural resources
relating to a North Slope natural gas project, oil and
gas and gas only leases, and royalty gas and other gas
received by the state including gas received as
payment for the production tax on gas; relating to the
tax on oil and gas production, on oil production, and
on gas production; relating to the duties of the
commissioner of revenue relating to a North Slope
natural gas project and gas received as payment for
tax; relating to confidential information and public
record status of information provided to or in the
custody of the Department of Natural Resources and the
Department of Revenue; relating to apportionment
factors of the Alaska Net Income Tax Act; amending the
definition of gross value at the 'point of production'
for gas for purposes of the oil and gas production
tax; clarifying that the exploration incentive credit,
the oil or gas producer education credit, and the film
production tax credit may not be taken against the gas
production tax paid in gas; relating to the oil or gas
producer education credit; requesting the governor to
establish an interim advisory board to advise the
governor on municipal involvement in a North Slope
natural gas project; relating to the development of a
plan by the Alaska Energy Authority for developing
infrastructure to deliver affordable energy to areas
of the state that will not have direct access to a
North Slope natural gas pipeline and a recommendation
of a funding source for energy infrastructure
development; establishing the Alaska affordable energy
fund; requiring the commissioner of revenue to develop
a plan and suggest legislation for municipalities,
regional corporations, and residents of the state to
acquire ownership interests in a North Slope natural
gas pipeline project; making conforming amendments;
and providing for an effective date."
10:03:57 AM
MICHAEL PAWLOWSKI, DEPUTY COMMISSIONER, STRATEGIC FINANCE,
DEPARTMENT OF REVENUE, introduced the PowerPoint
presentation titled "Response to Question from
Representative Edgmon" (copy on file). He discussed Slide
2, which was an example of the opportunities that existed
for small-scale use of LNG:
"The CIRI Talkeetna Lodge is a 212 room Lodge
operating the the tourism season. FNG provides LNG
year round for heating, hot water and cooking. There
is 10,000 gallons of LNG storage on-site for
uninterrupted supply of natural gas. The Lodge
receives a delivery of LNG approximately every two
weeks."
Mr. Pawlowski relayed that very rough estimates by AEA put
the cost of equipment currently at $1,000,000. He said that
when discussing future deposits to the Affordable Energy
Fund it should be noted that the fund is for all energy
sources.
Mr. Pawlowski turned to Slide 3, "SB 138 Includes AEA
energy planning." He noted that the important issue related
to the affordable infrastructure and areas not directly on
the pipeline route. Section 69 of SB 138 directs the AEA,
in consultation with AGDC, AIDEA and DOR to prepare a plan
for developing infrastructure to deliver affordable energy
to areas of the state that are not expected to have direct
access to a North Slope natural gas pipeline.
10:08:15 AM
Representative Edgmon hoped that there was substance behind
the commitment to provide affordable energy to all parts of
the Alaska, and not just the more convenient areas of the
state. He wondered if there was a way to tie-in the
language in the bill to the existing language pertaining to
the energy policy in the uncodified state statutes.
10:09:24 AM
Mr. Pawlowski referred to Page 60, section 67 of the H
version of the bill. He believed that the uncodified law
existed as direction to the state, but a reference in the
section to the context of that policy could appropriate.
10:10:28 AM
Representative Edgmon requested a statement regarding the
offtake points exit points and expense.
10:11:30 AM
Mr. Pawlowski replied that the commitment of the offtake
points in the HOA was to look for the benefits for
Alaskans, with access to reliable and predicable supplies
of energy. He said that the trick would be the
affordability of access as distance became a factor. He
stated that it would need to be examined whether taking at
the offtake would be the best option, or whether a
localized energy solution would be a better option. He
assured the committee that both options would be pursued as
part of the development of the agreements. He said that the
commitment to the issue was deep and that the section put
the right tools in place to build on regional energy work
already being done by AEA.
10:12:30 AM
JOE BALASH, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES,
added that the department had contributed to the work
pertaining to the tap in points to the line. He said that
pre-installing the takeoff points during the initial build
would be cheaper. He relayed that the incremental costs
associated with a tap was approximately $1 million.
10:13:37 AM
Mr. Pawlowski interjected that in pervious gasline plans,
the offtake had potentially been expensive because of the
high natural gas liquids content in the proposed plan. He
asserted that the current plan involved very clean LNG gas
and did not require the expensive equipment necessary for
the stripping of liquids.
Representative Guttenberg assumed that a takeoff point in
Nikiski would have charges based upon the GTP, tariffs and
distance sensitive rates. He asked about the Asian market;
if the flow was backtracked to the middle of the pipeline,
the rate would be relevant to the takeoff point, and not
everything else downstream.
Mr. Pawlowski responded yes, and that the distinction was
critical. He added that under the MOU, the state had
already agreed to distance sensitive rates for the areas
along the pipeline in three zones: the Nanana Zone, the Big
Lake Zone, and the delivery to the LNG plant.
Representative Guttenberg asked how the Nanana Zone was
defined.
Commissioner Balash replied that the zone included
everything north of Nanana.
10:17:39 AM
Representative Wilson understood the benefits to the owners
and TransCanada, but she expressed discomfort with the
balance the energy issues in the interior and the bush. She
wished to better understand why the project was a good deal
for state residents.
Commissioner Balash replied that the transportation
infrastructure would provide a relatively low-cost means of
delivering the commodity either from the North Slope or
Cook Inlet. He said at that point options would be examined
and that the lowest cost option to get gas to the corridor
would be selected.
Commissioner Balash referred to Slide 2 from the Black and
Veatch presentation, "State Participation on AKLNG Project,
April 15, 2014"(copy on file). The slide showed at a $16
dollar commodity price in Asia the state's wellhead value
would be approximately $7/MMBtu. He said that taking the $7
price, adding the treatment plan cost of $2, adding the
pipeline cost to the interior of $1 would total $10 to get
gas to Fairbanks. He furthered that if natural gas was
priced a $6 in the Cook Inlet Basin, the backhaul rates,
negotiated with TransCanada in the MOU, would mean the
benefit of Cook Inlet pricing in Fairbanks without the
transportation cost. He predicted that as the market demand
in Cook Inlet grew, additional supplies would be proven,
and additional opportunities for smaller producers would
open up. He asserted that the same thing would occur on the
North Slope, as long as a viable third party mechanism was
maintained through the state's equity capacity in the
pipeline, there would be companies and operators with small
amounts of gas that would be looking to make in-state sales
and could be willing to sell their gas for less than $7. He
said that the biggest distinction between the project and
the TAPS scenario was that the states crude oil had to be
refined in order to make it useful; natural gas and methane
took very little refinement.
10:23:03 AM
Representative Wilson understood that all of the language
was in the bill.
Commissioner Balash replied that it was not in the bill. He
said that how transportation charges would be priced was in
the MOU with TransCanada. He said that in 2015 there would
be a piece of legislation approving the Firm Transportation
Services Agreement (FTSA) with the specific terms laid out.
Representative Wilson said she would prefer to see the
terms before voting on the legislation.
Co-Chair Stoltze discussed housekeeping.
10:24:58 AM
Mr. Pawlowski stated that he appreciated the guidance about
the technical amendments on the bill.
CSSB 138(FIN) am was HEARD and HELD in committee for
further consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 178 Amendment #1 Gara.pdf |
HFIN 4/16/2014 8:30:00 AM |
SB 178 |
| SB169 Vax Assess Fund diagram.pdf |
HFIN 4/16/2014 8:30:00 AM |
SB 169 |
| SB169PayerPyramid_15Apr2014.pdf |
HFIN 4/16/2014 8:30:00 AM |
SB 169 |
| SB169 without it.pdf |
HFIN 4/16/2014 8:30:00 AM |
SB 169 |
| Marks SB 138 Gara Response 041514.pdf |
HFIN 4/16/2014 8:30:00 AM |
SB 138 |
| SB 138 4.16.14 Presentation HFIN Edgmon Question.pdf |
HFIN 4/16/2014 8:30:00 AM |
SB 138 |
| SB 138 4.16.14 Resource Reports Required by Appendix A to Part 380 of FERC Regulations.pdf |
HFIN 4/16/2014 8:30:00 AM |
SB 138 |
| SB 138 enalytica - response to Rep Gara.pdf |
HFIN 4/16/2014 8:30:00 AM |
SB 138 |