04/23/1998 03:10 PM House ECD

HB 469 - APPROVE SALE ROYALTY OIL TO MAPCO                                     
                                                                               
TAPE 98-5, SIDE A                                                              
Number 1849                                                                    
                                                                               
CHAIRMAN SANDERS announced the next order of business was HB 469,              
"An Act approving the sale of Prudhoe Bay Unit royalty oil by the              
State of Alaska to Mapco Alaska Petroleum, Inc.; and providing for             
an effective date."                                                            
                                                                               
CHAIRMAN SANDERS noted it is not his intent to move the bill out of            
the committee today, but he also realizes that holding the bill                
will not solve the problem.                                                    
                                                                               
CHAIRMAN SANDERS called on Jeff Cook from MAPCO Alaska Petroleum               
Incorporated (MAPCO).                                                          
                                                                               
Number 1886                                                                    
                                                                               
JEFF COOK, Vice President, External Affairs and Administration,                
MAPCO Alaska Petroleum Incorporated, testified in Juneau.  He is               
hear to support HB 469 and to ask that it be passed out of the                 
committee today.  There are a number of other committee referrals              
in the House and it still needs to go on to the Senate.  It is very            
appropriate to talk about the bill in the House Special Committee              
on Economic Development because it is a bill about economic                    
development and jobs for the city of North Pole, the Fairbanks                 
North Star Borough, the Municipality of Anchorage, and the state of            
Alaska.  It is about confirming the message that Alaska is open for            
business and economic development.  It is about encouraging                    
existing businesses in Alaska to expand.  He cited two companies in            
Fairbanks expanding because of the expansion of the MAPCO refinery             
in North Pole.  The bill is about encouraging one of the few value-            
added industries in Alaska to expand and export products to                    
international air carriers and to bring money back to Alaska.  The             
expansion will add 14 thousand barrels a day of jet fuel production            
and 3 thousand barrels a day of diesel fuel.  The 14 thousand                  
barrels a day of jet fuel will off set what is now being imported              
from outside.  The bill is about supporting a business that spent              
$90 million more with all vendors in 1998 than what it took in                 
through gross sales due to capital and construction projects.  The             
bill is about supporting a $70-million refinery for crude now under            
construction.  The bill is about adding 19 new permanent MAPCO                 
employees in Anchorage and Fairbanks, and another 300 employees in             
MAPCO express stores.  It is about supporting 375 construction                 
workers at its peak this summer.  Right now, there are over 100                
workers on site.  It is about supporting a business that spent $465            
million last year with 729 Alaskan vendors, educational                        
institutions, and charitable organizations.  It is about expanding             
the $8,351,962 spent with Golden Valley Electric by another $2                 
million per year to help stabilize electrical rates for commercial             
and residential consumers in the Interior and Fairbanks.  There                
will be about another 25 railroad cars per day going south from                
North Pole to Anchorage on the railroad increasing the Alaska                  
Railroad Corporation's revenue by over $10 million a year, adding              
20 new employees and new locomotives.  It will also increase                   
property taxes to the Fairbanks North Star Borough and city of                 
North Pole.  But all of these benefits can only happen if MAPCO has            
the additional crude oil allowing it to complete and operate its               
expansion.                                                                     
                                                                               
MR. COOK further stated the city of North Pole, the Fairbanks North            
Star Borough, and the Fairbanks Chamber of Commerce have all passed            
resolutions endorsing HB 469.  He as attended all of the public                
meetings and not one person has testified against the bill.  This              
bill is also about a commitment made a year ago between MAPCO and              
the legislature.  As the jet fuel tax was passed last year, MAPCO              
promised it would expand its refinery and bring economic benefits              
to Alaska.  MAPCO is moving ahead with that promise and now needs              
the royalty oil contract to complete the commitment.  He urged the             
committee members to send a strong message about economic                      
development in Alaska by passing HB 469 out of the committee today.            
                                                                               
CHAIRMAN SANDERS called for an at ease.                                        
                                                                               
CHAIRMAN SANDER called the meeting back to order.                              
                                                                               
Number 2120                                                                    
                                                                               
REPRESENTATIVE ALAN AUSTERMAN stated that he doesn't see the cost              
of fuel directly related to the contract.  He wondered whether a               
tax system could solve some of the problems with the price of gas-             
o-line in Fairbanks, Anchorage, and around the state.  It seems                
that the contract is important enough to the state to get it passed            
this year.                                                                     
                                                                               
Number 2149                                                                    
                                                                               
CHAIRMAN SANDERS stated he thinks that the bill will pass out of               
the committee the first part of next week.  There is plenty of time            
because soon there will be the one-day notice for scheduling                   
committee meetings.  He suggested to Representative Austerman that             
he talk to the other body to get it to move its version forward in             
order that the two versions can come together quicker.                         
                                                                               
REPRESENTATIVE AUSTERMAN asked Chairman Sanders whether he has                 
scheduled the bill for next week yet.                                          
                                                                               
CHAIRMAN SANDERS replied he has scheduled it for Thursday.                     
                                                                               
REPRESENTATIVE AUSTERMAN responded that is one week from today.                
                                                                               
REPRESENTATIVE IVAN M. IVAN stated he is also concerned about the              
bill's scheduling, especially in regards to a conference committee.            
                                                                               
REPRESENTATIVE AUSTERMAN stated a conference committee could be a              
good week away too because of the work being done in the Senate.               
                                                                               
CHAIRMAN SANDERS stated he will talk to the House Finance Committee            
for scheduling as well.                                                        
                                                                               
REPRESENTATIVE MARK HODGINS asked Chairman Sanders whether the                 
earliest the bill could be moved out of the committee is one week              
from today.                                                                    
                                                                               
CHAIRMAN SANDERS replied, "Yes."                                               
                                                                               
REPRESENTATIVE AUSTERMAN stated it is further than that because of             
the deadline for scheduling committee hearings.                                
                                                                               
CHAIRMAN SANDERS stated there could be a meeting on Tuesday.                   
                                                                               
REPRESENTATIVE AUSTERMAN noted it is already passed the scheduling             
deadline.                                                                      
                                                                               
CHAIRMAN SANDERS asked his staff to see what could be done about               
the scheduling.  He reiterated it is not his intention to move the             
bill out of the committee today.