Legislature(1995 - 1996)
02/13/1996 10:11 AM House O&G
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HJR 54 - FAVOR TRANS-ALASKA GAS SYSTEM & LNG SALES Number 196 REPRESENTATIVE GENE KUBINA, sponsor of HJR 54, was first to testify. He said HJR 54 is a resolution attempting to encourage the construction and marketing of natural gas. He stated that there is over 30 trillion cubic feet of natural gas on the North Slope which can benefit the state of Alaska if it is marketed. The HJR 54 incorporates a number of "whereas" statements settings out facts about the gas and the gas pipeline. The HJR 54 has gone through a process of gaining consensus from the oil companies, Yukon Pacific Corporation, and the Governor's office. He said the first draft of HJR 54 was done last March. REPRESENTATIVE KUBINA said the essence of HJR 54 is requesting four specific things be done. The first requests the President of the United States to include the Alaska gas pipeline as part of a national trade issue. To do this, HJR 54, requests that he mention the pipeline at appropriate times to heighten its interest and also to direct the Presidential staff who focus on trade to make it a priority with their negotiations in the Asian market. REPRESENTATIVE KUBINA said the second request of HJR 54 is that it has the legislature, on record, requesting the Governor to create a gas pipeline and that it be a top priority in his Administration. A letter was received this morning, from the Governor, endorsing HJR 54 and also stating that the Governor has begun the process stated in the resolution. REPRESENTATIVE KUBINA said the third goal of HJR 54 is that it indicates the strong support of the legislature in seeking markets for our natural gas and constructing a gas pipeline. He said lastly, HJR 54 encourages the establishment of a forum for the various parties to come together and talk about the involved issues. He said this was the biggest problem with the pipeline development and, as a state, we can help facilitate that process. REPRESENTATIVE KUBINA said he has provided the committee with a committee substitute. REPRESENTATIVE GARY DAVIS made a motion to address CSHJR 54, version W, dated February 12, 1996. Hearing not objections, the committee addressed the CSHJR 54 version of the bill. CHAIRMAN ROKEBERG asked for clarification of line 13, on page two. REPRESENTATIVE KUBINA said the Alaskan Municipal League (AML) attempts, as does CSHJR 54, to avoid getting into the debate of whether the pipeline terminal is in Valdez, Kivalina or another location. The AML wants to get all participants involved in this issue, including the state of Alaska, to convene and develop an unified proposal. He added that CSHJR 54 asks the Governor to get everyone in the same room in order to get it resolved. CHAIRMAN ROKEBERG noted that Representative Gary Davis joined the committee meeting at 10:12 a.m. Number 650 CHAIRMAN ROKEBERG referred to page one, line seven, and asked if the 26 trillion cubic feet mentioned consisted of the amount at the Prudhoe Bay field. He mentioned that there is also gas in other fields in the North Slope, such as Point MacIntire. Number 697 REPRESENTATIVE KUBINA said he changed this section, at the request of the oil companies, to specifically read the amount is in Prudhoe Bay. He said there is 5 trillion cubic feet at Point Thomson and in other areas. Number 768 DONNA FISCHER, Business Owner, testified via teleconference from Valdez. She said the gas pipeline will diversify the state in numbers and types of businesses. She added that it will also diversify where income to the state is derived. She said she was a member of the Alaska Municipal League, who are strongly behind "the resolution." Number 845 DAN LaSOTA, Assemblyman, Fairbanks North Star Borough Assembly was next to testify. He referred to a resolution passed by the Fairbanks North Star Borough Assembly, number 96-009, which unanimously supports HJR 54. He said unanimous support for any resolution is not common, and it should be understood that it shows a strong measure of support for this issue. He added that there should be specific language placing the gas pipeline along the central corridor of Alaska. MR. LaSOTA said the reasons for placing the pipeline in the central corridor include timing and benefits for communities along this corridor. He said permits are already located for the central corridor and as he understood, the project must go through under a certain timetable. He said that Fairbanks, the North Slope Borough and the city of Valdez income from the pipeline as well as spin-off projects are important factors. These possible benefits include fleet vehicles running on natural gas, homes fueled by natural gas, and manufacturing factories develop along the central corridor using the gas as a raw material. MR. LaSOTA said CSHJR 54 addresses the placement of the pipeline and the assembly is glad to see that, but would encourage stronger language to specifically state that the pipeline would be put in the central corridor. He said the next item he wished to address was Alaska hire. He read from the resolution, "the Borough believes that it is also essential that labor for any project, especially of this scope, come from the skilled and ready work force that already exists in the state of Alaska." He added that it would be a shame to put through a project of this scope and not have Alaska residents working on it. He said it is important that an up front attempt be made for Alaska hire. MR. LaSOTA said CSHJR 54 meet the intent and wishes of the Fairbanks' resolution. Number 1135 SARA HANNAN, Executive Director, Alaska Environmental Lobby, Incorporated was next to testify. She said she was representing the TransAlaska Gas Systems Environmental Review Committee (TAGS ERC.) She said six years ago, Yukon Pacific Corporation, undertook an extreme and unusual experiment in working with the environmental community on a major development project. Yukon Pacific Corporation's interest and intent was to evoke a dialogue that would lead to the construction of a project that they think is socially, economically, and environmentally sound. To produce and equitable dialogue, Yukon Pacific Corporation invited the environmental community to form a committee that would actively work on the project with them. This committee, TAGS ERC, was formed and has worked on this project for the past six years. MS. HANNAN said TAGS ERC does not endorse this project in and of itself, but the committee does endorse this resolution and the open dialogue that CSHJR 54 advocates. She referred back to Yukon Pacific Corporation and the environmental community working together. She said Yukon Pacific Corporation has demonstrated itself to be a good neighbor and a good model. Yukon Pacific Corporation has not asked for regulatory reform and have show that they are willing to comply with the federal no net loss of wetlands policy as well as seeking to comply with state and federal regulatory oversight of the environmental laws currently in place. The committee believed that this resolution speaks to that and to the future of Alaska. She added that the environmental community of Alaska will work to see socially, economically, and environmentally sound projects go forward. MS. HANNAN said it is important that the southern pipeline corridor be used. She encouraged the legislature to work with the gas producers to get the project on line. She said to plan for the next century means that we must look beyond this years fiscal analysis. She said the long range vision that CSHJR 54 incorporates, leads us there. Number 1229 REPRESENTATIVE SCOTT OGAN asked if there would be the same sort of cooperation, between the various parties, if a new pipeline route was chosen. Number 1244 MS. HANNAN said the spirit of cooperation would continue, but the environmental analysis of where the TransAlaska pipeline lays is in place. She added that the southern corridor has the science of 20 years behind and development of that area in place. If the pipeline project was undertook in a different region, the basic environmental oversight, which has already taken place with the southern route, would have to occur. So, a route change would delay the project substantially and new environmental problems would have to be resolved. MS. HANNAN explained the problem with the proposed alternative routes. She said it means going from a non-ice free port to crossing an entire permafrost region. She said the southern pipeline corridor traverses arctic, sub-arctic, and near arctic habitats so not all the corridor is permafrost. She said the southern corridor involves a longer engineering feat, but more diversity. Having a pipeline route that is in an entire permafrost habitat involves different environmental concerns. MS. HANNAN said the spirit of cooperation for a gas pipeline community would be there from the environmental community. She added that, technically, an alternative route would be much further behind because the southern corridor has a lot of sound science behind it and a new route would require starting at ground zero. Number 1323 CHAIRMAN ROKEBERG asked if the environmental community had an opinion about a buried pipeline. Number 1334 MS. HANNAN said this issue was not specifically addressed. She said the TAGS ERC includes some community leaders, including Steven's Village, and they have had an opinion about a buried line versus a non-buried line. She said that within the review committee there is a variety of technical expertise, but she could not comment on this issue specifically. Number 1361 CHAIRMAN ROKEBERG asked if the TAGS ERC took no position on buried versus non-buried pipeline. MS. HANNAN said, no, they did not. Number 1376 PAUL FUHS, Lobbyist, Southwest Alaska Pilots Association, was next to testify. He said the pilots that he represent are currently the marine pilots who bring the tankers into Prince William Sound. He referred to a letter, dated February 8, 1996, from the Southwest Alaska Pilots Association. He said this letter supports HJR 54. He said in review of CSHJR 54, "it is fine in the form that it's in." MR. FUHS said the marine pilots are one of the service industries, in Alaska, related to the oil industry. The marine pilots would benefit greatly from this project, as would other firms that work as oil field service companies. MR. FUHS said the southwest marine pilots have been piloting LNG tankers into Nikiski, from the Phillips plant, for almost 20 years. He said LNG is a safe, clean cargo. He added that the fuel for the tanker, except for some actual fuel used in the harbor, is mainly derived from the fumes that evaporate off the LNG. MR. FUHS concluded by thanking the representatives who co-sponsored CSHJR 54 and urged its support. Number 1466 CHAIRMAN ROKEBERG asked if a western pipeline route were used, whether marine pilots would be utilized. Number 1487 MR. FUHS said yes, all foreign vessels and all vessels over a certain size are required to have pilots. He said it would be a different pilots group, the Alaska Marine Pilots in Western Alaska. Number 1502 CHAIRMAN ROKEBERG asked if there was an opinion from the marine pilots regarding Russian ice breakers. Number 1520 MR. FUHS said this option had been explored for many years on the North Sea route, and the vessels are capable but need some modifications to bring them up to Coast Guard standards. He said some ice strengthened Finnish ships are carrying LNG over on the western side of the Arctic. He added that there are additional costs associated with ice strengthened vessels, such as ice breaking tugboats. He said his organization had not objection to a western route, but added that it took Yukon Pacific Corporation ten years to get permits and mentioned the timing issue that would arise if a different route were chosen. Number 1562 REPRESENTATIVE OGAN asked for clarification of the role of a ships pilot versus a master of the ship. Number 1577 MR. FUHS said the purpose of a marine pilot is that when a ship comes into Alaska waters, there is someone aboard the ship with experience and knowledge of those waters. This knowledge includes hazards to navigation, current, winds, et cetera. Pilots are licensed on their local knowledge. The master is still technically in charge of the ship, but Alaska state laws require that a pilot be on board. He said in the case of the Exxon Valdez, pilots weren't required to be on board at that point in Alaska waters, but since then, under the law, pilots are required to be on board at that point. Number 1610 MANO FREY, President, AFL-CIO, was next to testify. He urged the passage of CSHJR 54. He said the AFL-CIO has been working with Yukon Pacific Corporation for some time and have an agreement in principle that his organization will negotiate a project labor contract for the construction of the pipeline if Yukon Pacific Corporation is ultimately involved in the project. He made an analogy to Yukon Pacific Corporation and a siphon hose as to their position of neither controlling the natural gas or the market. He hoped the gas producers would actively work to achieve a consensus on the timing, route and best methods to get this gas to market. He said at some point and time, the cost of getting this LNG will outstrip the market price of the LNG. Number 1759 REPRESENTATIVE TOM BRICE asked if there are negotiations relating to the maintenance and operation of the pipeline as well. Number 1768 MR. FREY said no, the discussions have centered around the construction of the line itself. He again stated the timing issue. He concluded that once the pipeline is becomes a formal project, then discussions regarding maintenance and operation of the pipeline will occur. Number 1807 CHAIRMAN ROKEBERG confirmed that there was a project-labor agreement in principle with Yukon Pacific Corporation and asked if there had been discussions with the gas producers on the same topic. Number 1819 MR. FREY said those discussions had not occurred, but would occur shortly. He said the gas producers are aware that a project of this size is clearly of interest to the AFL-CIO. At Chairman Rokeberg's prompt, he added that the AFL-CIO has had experience with pipeline construction. CHAIRMAN ROKEBERG said that Wayne Lewis had not arrived to testify and asked the committee to table CSHJR 54 temporarily in order to address HB 394. HJR 54 - FAVOR TRANS-ALASKA GAS SYSTEM & LNG SALES Number 2112 CHAIRMAN ROKEBERG said he would like to bring back for the committee, CSHJR 54. Number 2140 REPRESENTATIVE OGAN made a motion to adopt CSHJR 54. Number 2149 REPRESENTATIVE BRICE objected to the motion for purposes of discussion. He proposed an amendment, on page three, after the last further resolve, from line 11 to 13, to include one other further resolve, before the copy section. "Further resolved that the Alaska State Legislature to ensure the highest level of Alaskan hire possible, strongly encourages the implementation of the project-labor agreement covering the construction, operation and maintenance of the gas transmission." He said part of CSHJR 54 speaks to the number of jobs, but includes no legislative intent to encourage Alaskan hire. He encouraged alternatives to Alaska statute to ensure that Alaskan companies are involved. He said we need to encourage Alaska hire on these large projects. Number 2329 REPRESENTATIVE OGAN objected to the amendment for purposes of objection. Number 2338 REPRESENTATIVE GARY DAVIS said his concern was based on the past efforts of the legislature, to attempt to initiate local hire legislation, have failed. He said that private enterprise should be encouraged in a cooperative effort with the state to hire Alaskans. He proposed an amendment on page three, line four, "we resolve that the Governor is respectfully requested to discuss issues and structure related to the pipeline." TAPE 96-10, SIDE A Number 000 REPRESENTATIVE BRICE questioned the importance of the Governor's involvement, and said the word, "resolve," speaks specifically towards certain procedural and administrative types of functions versus the legislature requesting this from the owners of the project. Number 077 REPRESENTATIVE GARY DAVIS said he agreed with Representative Brice and suggested local hire could be inserted on page three, line nine, where it directs the Governor to meet with all parties to determine how the state can help facilitate an ANS gas transportation system. He said that local hire discussions could be incorporated in that section. He said he preferred adding line four to specifically address local hire policy. Number 130 REPRESENTATIVE BRICE suggested, under line four, something along the lines of, "that the Governor is respectfully requested to encourage developers and the Alaskan labor forces to implement a project-labor agreement covering the construction, operation and maintenance of the gas transmission line." Number 179 CHAIRMAN ROKEBERG asked Representative Kubina to take a sense of the will of this committee and amend CSHJR 54 in the next committee. Number 223 REPRESENTATIVE KUBINA said he would work with Representative G. Davis and Representative Brice to have language that they both agree on and included it in a CSHJR 54 for the next committee. Number 257 REPRESENTATIVE BRICE said he withdrew his amendment. He said the issue he addressed, raises the types of concerns that this committee should be looking at. Number 311 REPRESENTATIVE GARY DAVIS withdrew his amendment. He suggested some modifications in the language of the CSHJR 54, that on page one, line seven, instead of 26,000,000,000,000 it should read 26 trillion. He also added on page two, line five, he suggested changing the definitive wording to "would" or "could" provide. Number 405 CHAIRMAN ROKEBERG suggested that a copy of HJR 54 be directed to the Governor. He suggested including the fact that this would be the largest civil project in the history of the world in CSHJR 54. Number 520 REPRESENTATIVE BETTYE DAVIS made a motion to move CSHJR 54 out of the committee with attached fiscal note, individual recommendations and the proposed amendment. Hearing no objections the CSHJR 54 was moved out of the House Special Committee on Oil and Gas.
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