Legislature(2011 - 2012)BUTROVICH 205
03/23/2012 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB209 | |
| SB215 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 209 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 215 | TELECONFERENCED | |
SB 215-GASLINE DEV. CORP: IN-STATE GAS PIPELINE
4:32:35 PM
CO-CHAIR PASKVAN announced consideration of SB 215.
4:32:38 PM
SENATOR JOE THOMAS, sponsor of SB 215, said the route in SB 215
has been studied by Enstar, ANGDA, the ASAP pipeline and others.
It is nothing new. It is the southern route using the Parks
Highway, which is the route preferred by Enstar and the Alaska
Gasline Development Corporation (AGDC) and it could be
reconfigured to serve the AGIA line if it ever went to Valdez.
Last week, Buccaneer and Furie indicated that a line going to
the Interior would be good for the market and that it is also
the shortest route. It also has the shortest timeline and
probably the most reasonable cost.
He said that the Resources Committee knows exactly what is going
on in the state with gas and this southern portion would
dramatically increase the opportunity for gas exploration and
development in the Interior basins some of which have been
explored for decades. There is a fair amount of potential, but
no way to move the gas. This route would also reduce costs for
natural resource development in Southcentral, and the Upper
Kuskokwim and Interior regions of the state.
SENATOR THOMAS said the Donlin Creek Mine is planning on
building a pipeline which would almost parallel this one and
there is some potential for a partnership there even though
their line would veer to the west at some point. There is also
great potential in the Interior with the new International Tower
Hills Mine. If the gas does prove up in the Cook Inlet, it would
only make sense to build at least the southern portion of the
line.
4:35:45 PM
JOE DUBLER, Vice President and CEO, Alaska Gasline Development
Corporation (AGDC), said he prepared a precursor to a fiscal
note, a rough thumbnail shot at what the cost would be on SB
215. He said Black and Vetch provided a very sophisticated
tariff model that cost $50,000 to run. For it he estimated the
capital expenditures that a tariff would support in two
different scenarios. One was just the tariff and the other was
tariff plus the gas. It compared Cook Inlet to Fairbanks route
(southern) and the North Slope to Fairbanks route. The North
Slope to Fairbanks numbers came from their July 1 report as did
the southern route numbers to make it easy for the readers to
determine what costs went towards which tariffs and which
destinations.
For the tariff in the first column they used the estimated costs
from the North Slope to the Fairbanks City Gate (including the
lateral from the main line and the straddle plant) and came up
with $6.45 (not including the estimated cost of gas at $2 or the
estimated $2 distribution cost).
4:38:28 PM
SENATOR FRENCH asked why they used that number and if it would
be the same amount going south to north.
MR. DUBLER replied that they were trying to come up with an
estimated CAPEX that could be supported by that tariff.
CO-CHAIR PASKVAN said he understood that the tariff in the ASAP
report to Fairbanks was $10.80 and asked he came up with $6.45.
MR. DUBLER responded that adding the $2 cost of gas on the North
Slope and the $2 distribution cost in the Fairbanks area to the
$6.45 gets you $10.45. Then they figured an average 60 mmcf/d
and number of days per year (adding a quarter of day for leap
years) and came up with an allowable cost recovery per year of
$141,351,750 and when that is multiplied by 20 years you get a
CAPEX of $2.827 billion.
The bottom of the spreadsheet showed the pipeline would cost
$1.565 billion to build from Big Lake to Dunbar. The report had
$1.999 billion but he backed out the Cook Inlet NGL extraction
plant because that didn't belong there and some compression
station costs.
CO-CHAIR PASKVAN said he thought the fractionation plant in the
ASAP report was $954 million by itself.
MR. DUBLER replied he got those numbers from page 5-35 of the
report; and the Cook Inlet NGL extraction facility was $410
million.
CO-CHAIR PASKVAN said something at the southern end of the line
was $954 million.
MR. DUBLER said he would help him figure it out.
SENATOR WIELECHOWSKI asked if the gas is different coming from
Cook Inlet such that it doesn't have to be processed in the same
way gas from the North Slope does.
MR. DUBLER replied yes; that is why the North Slope facility (to
extract HS, HO and COat a cost of $1.840 billion) is not
222
included in any of these costs.
SENATOR STEDMAN said he found the spreadsheet a little confusing
and asked if it compares two alternatives why a conditioning
plant wouldn't be included on the North Slope if one was needed.
MR. DUBLER replied that the conditioning plant is included in
the $6.45 number going from the North Slope down, but the
conditioning facility isn't relevant on the Big Lake to Dunbar
route.
4:43:14 PM
SENATOR WIELECHOWSKI asked what the equivalent tariff would be
to build a line from Cook Inlet to Fairbanks.
MR. DUBLER replied that he didn't run that number, but he had
converted tariffs to CAPEX for comparison. He offered to pay the
consultant to do another run if that's what the committee
wanted.
4:43:57 PM
CO-CHAIR PASKVAN said he was looking for the tariff figure to
the Big Lake area.
MR. DUBLER said the total tariff at Big Lake was $5.63 and he
didn't include the straddle plant in Fairbanks and the lateral
line.
CO-CHAIR PASKVAN asked the tariff between Big Lake and Dunbar.
MR. DUBLER replied the capital cost for a pipeline from Dunbar
to Big Lake is $1.99 billion and he didn't have the tariff for
that number handy, but said he would get it.
4:48:11 PM
MR. DUBLER said page 3-10 of the report had the estimated tariff
build up case with no inflation: the gas conditioning facility
was $1.42, the pipeline from the North Slope to Dunbar was
$2.56, and the pipeline from Dunbar to Big Lake was $1.65. These
equal the $5.63.
CO-CHAIR PASKVAN said he assumed the tariff from Big Lake to
Interior Alaska would be the same under either pipeline.
MR. DUBLER replied that is not a valid assumption; many things
go into a tariff and capital expenditures is only one. His
spreadsheet showed that it's $412 million cheaper to run from
south to north, because you don't have the straddle plant, an
off-take facility or the conditioning on the North Slope.
Throughput on the line is another consideration. Gas going south
is 500 mmcf/d and on gas going north is only 60 mmcf/d. While
the numerator gets smaller, the denominator gets a lot smaller;
so, the tariff gets bigger.
CO-CHAIR PASKVAN asked if the ASAP tariff of $1.60 and the
tariff from Big Lake to Dunbar of $1.65 was accurate (on page 3-
10).
MR. DUBLIER replied that was correct.
4:50:34 PM
SENATOR FRENCH asked how big of a pipe is needed to carry 60
mmcf/d.
MR. DUBLER replied their engineers estimated getting by with 12
inches and maybe smaller. The issue with the wording in SB 215
is that they are prebuilding for an in-state line so it would
have to be bigger and more expensive.
SENATOR STEDMAN said the spreadsheet is hard to follow and he
wanted more footnotes or explanations.
MR. DUBLER replied this is just a brief shot at coming up with a
thumbnail sketch of where they are. He asked for a few more
minutes to explain the rest of the spreadsheet.
4:52:48 PM
CO-CHAIR PASKVAN said they wanted him to do that, but the point
is that at 24 inches this line going from Cook Inlet north could
operate as the lateral serving Southcentral if there ever is a
48-inch line that would go to Valdez and if Cook Inlet goes dry
in the future. Otherwise the line could be smaller.
MR. DUBLER said he was correct.
He continued the report's listing of costs: $1.565 billion for
the pipeline less the noted deductions; $60 million for the
lateral line; $80 million for a Cook Inlet compressor station
(less than the $140 million compressor station for the 24-inch,
2500 psi line).
Going from south to north with a smaller volume of gas instead
of going from the North Slope south (where the 500 mmcf is
chilled to well below freezing so it doesn't melt the
permafrost) they had to add a chilling unit at Cantwell (the
limit where engineers estimated the permafrost would begin) for
a cost of $20 million; annual operating costs were estimated at
$690 million over the 20 year term (roughly 2 percent of CAPEX);
that was a total cost of $2.4 billion (south to north). Compared
to the estimated $2.8 billion for the north to south route, it's
$412 million cheaper.
4:55:26 PM
CO-CHAIR PASKVAN asked if the $954 million for the fractionation
plant was included in the 2 percent annual CAPEX for the ASAP
project.
MR. DUBLER replied no; a fractionation plant would process the
liquids in Cook Inlet; it would be built by a third party and
would not be included in the cost of this project. It would be
at Big Lake closer to the pipeline.
CO-CHAIR PASKVAN asked if there would be no liquids shipped out
of the Cook Inlet facility under the ASAP project.
MR. DUBLER replied that was correct and it would alleviate the
need for a straddle plant in Fairbanks.
4:57:17 PM
SENATOR STEDMAN asked if the $6.45 tariff includes the gas
processing plant on the North Slope.
MR. DUBLER replied yes. He estimated the total capital costs to
be recovered through the tariff at $2.8 billion (North Slope to
Fairbanks including a pro-rata portion of the processing plant).
SENATOR STEDMAN asked if the $2.8 billion line goes just to
Fairbanks and where the line goes south stops in his analysis.
MR. DUBLER replied the $2.8 billion is just for the North Slope
to Fairbanks' "city gate" and all the facilities in between.
That includes the processing plant on the North Slope, the
pipeline from North Slope to Dunbar and the straddle plant at
Dunbar to take the liquids off and re-inject them in the main
line that runs into Fairbanks.
SENATOR STEDMAN said it would be nice to see a summary so they
could understand it two months from now.
MR. DUBLER said he would do that in the coming days.
CO-CHAIR PASKVAN said Mr. Dubler had been very busy and they
appreciated him putting this presentation together, but the
committee needed more information in a clearer format.
[SB 215 was held in committee.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 209 Hearing Request SEN RES.pdf |
SRES 3/23/2012 3:30:00 PM |
SB 209 |
| SB 209 Sponsor Statement.pdf |
SRES 3/23/2012 3:30:00 PM |
SB 209 |
| SB 209 OG Leasing Fact Sheet.pdf |
SRES 3/23/2012 3:30:00 PM |
SB 209 |
| SB 209 Bill Version A.pdf |
SRES 3/23/2012 3:30:00 PM |
SB 209 |
| SB 209 Oil and Gas Leasing Statute.pdf |
SRES 3/23/2012 3:30:00 PM |
SB 209 |
| SB 209 Sample Lease_OGL-DL-1-01Feb74(ADL63059)P.pdf |
SRES 3/23/2012 3:30:00 PM |
SB 209 |
| SB 209 Sample Lease 2_OGL#DOG 200204RevOct03PB.pdf |
SRES 3/23/2012 3:30:00 PM |
SB 209 |
| SB 215_DRAFT AGDC Cost Estimates.pdf |
SRES 3/23/2012 3:30:00 PM |
SB 215 |
| SB 209 Slide Presentation_Oil and Gas Leasing.pdf |
SRES 3/23/2012 3:30:00 PM |
SB 209 |