Legislature(2009 - 2010)BARNES 124
03/28/2009 10:00 AM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| HB164 | |
| HB163 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 163 | TELECONFERENCED | |
| *+ | HB 164 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 163-ALASKA NATURAL GAS DEVELOPMENT AUTHORITY CO-CHAIR MILLETT announced that the final order of business would be HB 163. 11:30:54 AM MR. BALASH reiterated HB 163 is one of the three components of the administration's plan to initiate an in-state natural gas pipeline project. He recalled a 2002 ballot initiative created the Alaska Natural Gas Development Authority (ANGDA) and the original language of the initiative directed ANGDA to pursue a project from Prudhoe Bay to Valdez with a spur line to Southcentral. In 2004, the legislature expanded ANGDA's mission to include a pipeline to Cook Inlet. Mr. Balash noted that today the energy needs of Alaskans requires further expansion of ANGDA's purpose as a useful tool to facilitate pre-development activities. 11:33:23 AM MR. BALASH, in response to Representative Johansen, restated the initiative was enacted in 2002, and amended by the legislature in 2004. 11:34:23 AM REPRESENTATIVE JOHANSEN observed this was a citizen initiative and the bill is a proposal by the governor to amend the citizen initiative. He asked whether the amendment is necessary because there is new information, or a changing environment affecting the statute. MR. BALASH opined that was part of the consideration. Additionally, however, ANGDA has been operating beyond its statutory mission, albeit with the legislature's knowledge and funding, and the bill allows the agency to become a vehicle for getting gas and moving it anywhere in the state. 11:37:15 AM REPRESENTATIVE JOHANSEN said it was a valid point for the legislature and the governor to readdress the statute and make adjustments. 11:37:55 AM REPRESENTATIVE PETERSEN asked whether HB 163 would allow a company to build a short pipeline that connected to the existing pipeline system. MR. BALASH said Sec. 1 would allow ANGDA to look beyond the North Slope for a supply of gas. In further response to Representative Petersen, he indicated that a pipeline of any length would be allowed. 11:39:12 AM CO-CHAIR MILLETT recalled ANGDA was directed to complete a gas pipeline by 2007. She asked for an overview of ANGDA's accomplishments; how much money the state has appropriated to ANDGA; and what its work product has been. 11:40:03 AM MR. BALASH related that after the initiative was passed in 2002, the Murkowski Administration appointed a board of directors for ANGDA. A modest appropriation funded the agency to do the work required under the original initiative, which was to investigate the feasibility and economic viability of a pipeline project from Prudhoe Bay to Prince William Sound with a spur line to Southcentral. The authority prepared a report to Alaskans in 2004; also during that year the legislature reviewed statutory changes and expanded the authority's scope. Also in 2004, applications began to be submitted under the Stranded Gas Development Act (SGDA), and it became clear that the administration's priority was a large diameter pipeline. In fact, ANDGA began to focus on developing the spur line service from the big line to Southcentral. The authority also looked at opportunities for petrochemical development; other uses of natural gas; and propane distribution along the rivers of rural Alaska. During 2005-2006 ANGDA secured a conditional right-of- way lease from the Department of Natural Resources (DNR) for the spur line project along the Glenn Highway. Early in the days of the Palin Administration, ANGDA was directed back to the original project; thus in 2007 major funding was used to develop an AGIA application. In 2008, that application was rejected for noncompliance. 11:45:26 AM CO-CHAIR MILLETT asked whether ANGDA submitted an application to build a pipeline. MR. BALASH explained ANGDA's application was to build a spur line along the Glenn Highway connecting to an LNG applicant, or to continue up the Richardson Highway to Delta Junction to connect with one of the large pipeline projects. CO-CHAIR MILLETT asked, "So, ANGDA would own and build a pipeline, was that the idea?" MR. BALASH expressed his belief that ANGDA's plan was to do the pre-development work necessary to turn the project over to a private developer/owner/operator. After the issuance of the AGIA license to TransCanada, the administration received an estimate of the funding needed for ANGDA to continue work until the open season in 2010. He then pointed out that at the end of the legislative session of 2008, the legislature passed a resolution in support of in-state gas; however, the governor's request for $10 million to study routes for an in-state gas pipeline was denied and $4 million was appropriated to ANGDA. 11:48:53 AM MR. BALASH, referring back to Co-Chair Millett's question, said the authority has been appropriated about $10 million in total. He assured the committee ANGDA is ready to begin its next stage of work in pursuit of the spur line project; in fact, the administration has done its best to keep in sight the statutory mission, as well as the purpose behind specific appropriations made by the legislature. 11:50:03 AM REPRESENTATIVE TUCK asked about the Alaska Gasline Port Authority (AGPA). 11:50:31 AM MR. BALASH said, "ANDGA and AGPA are two very different organizations with very different track records." REPRESENTATIVE JOHANSEN asked who sponsored the ANGDA initiative. MR. BALASH said one sponsor was Scott Hayworth who is now a member of the board of directors. 11:51:30 AM HAROLD HEINZE, CEO, Alaska Natural Gas Development Authority (ANGDA), Office of the Commissioner, Department of Revenue (DOR), informed the committee the ballot statement of support for ANGDA was signed by Mike Macy (ph), Tyrone Neill (ph), and Scott Hayworth. Mr. Heinze continued to explain that the ANGDA initiative passed in the 2002 election by a 2:1 margin. He added that the initiative was born of frustration during the Knowles Administration. In the summer of 2003, the ANGDA board of directors was appointed and official work began in September 2003. The first task undertaken by ANGDA was to look at an LNG project; after eighteen months of study ANGDA concluded the project was economic, competitive, and feasible, but beyond the means of ANGDA. Also, at that time, SGDA deflected interest away from an LNG project. The authority focused on development of the spur line; obtained a conditional right-of-way for Glennallen to Palmer that is worth several million dollars; and submitted an application under the AGIA process. The AGIA application was focused on ANGDA's part of a partnership that was dependent on a private sector partner. Mr. Heinze clarified that ANGDA is not interested in owning and building a pipeline, but is interested in "making one happen." Other events that have influenced ANGDA's interest include the recent rise in energy prices and the propane project on the North Slope. He emphasized that ANGDA continues to advance the spur line through the regulatory approval process and has almost established a "ready to build status" for any private sector party coming in. Mr. Heinze opined House Bill 163 is necessary for clarity so that ANGDA can qualify for major financing. 11:57:39 AM CO-CHAIR MILLETT recalled the initiative tasked ANGDA with 12 goals, and the final goal was to have a gas line in full production by 2007. She asked how much closer [the state is] to getting an in-state gas line. MR. HEINZE acknowledged that Sec. 5, Item 11, of the initiative petition set out a series of plans, and the goal of having the Alaska gas line in production by 2007 was missed. The intent of Sec. 5 was to provide a first year task; however, the focus of the governor and the legislature was on the pipeline through Canada and ANGPA was working on an LNG project. He discussed his experience in the industry back to 1969. Mr. Heinze opined that "things are in good shape" because of the two groups working on the big pipeline through Canada and their FERC applications. The primary focus for ANGDA now is to assure that the in-state side is well represented in the FERC process. The in-state project must be prepared to interface with the big project between January and July 2010, and be further prepared to participate as provided for under the federal legislation that will guide FERC in its proceedings on the Alaska gas pipeline. CO-CHAIR MILLETT asked if ANGDA asked for an appropriation in the operating budget. MR. HEINZE said ANGDA requested $315,000, and he described his office staff. Regarding further appropriations, he said ANGDA has received approximately $10 million in appropriations and with operating expenses has received about $12 million. In return for that, the state has several projects where the private sector can move forward. He opined the private sector lacks the ability to see with certainty whether the big pipeline will succeed or not; once that question is answered, there are a number of pipeline companies that will be interested in the Alaska line. 12:04:11 PM CO-CHAIR MILLETT asked about the level of interest from producers on the rights-of-way ANGDA has obtained. MR. HEINZE said several large Lower 48 pipeline companies are interested in the spur line project; in fact, their interest is due to the work ANGDA has done. Furthermore, he assured the committee that it is clear to interest parties that public monies expended by ANGDA must be reimbursed. 12:05:20 PM CO-CHAIR MILLETT announced HB 163 was held over.
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