Legislature(1995 - 1996)
03/14/1996 01:12 PM House RES
| Audio | Topic |
|---|
* 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 0067 TOM VAN BROCKLIN, Legislative Staff to Representative Gene Kubina, sponsor of HJR 54, noted that Representative Kubina would arrive momentarily. JOHN LANDRUM, Kenai Region Manager, Kenai LNG Facility, Phillips Petroleum Company, testified via teleconference, saying he was responsible for the Phillips/Marathon liquified natural gas (LNG) project. Started in 1969, the LNG project on the Kenai Peninsula had been in continuous operation for over 26 years, exporting LNG to customers in Japan. MR. LANDRUM specified he was testifying as a technical and business expert regarding the LNG business, saying he was an engineer associated with LNG in a management role for several years. His company believed the LNG business was a big, well-developed, global business that was still growing at a significant rate. "It is also a business that is very safe and environmentally friendly and therefore can be a very good industrial citizen in the communities where it is located," Mr. Landrum stated. He said several members of the House Resources Committee had visited the company's plant near Nikiski. MR. LANDRUM supported a resolution to encourage all parties involved to move toward developing an economically viable LNG project to market gas reserves from Alaska's North Slope. However, Phillips was not necessarily a disinterested third party, he said. They had an interest in some North Slope gas reserves, specifically, the yet-to-be-developed Point Thompson field. They also possessed proprietary technology and experience that could be used in such a project and generally sought involvement in LNG projects around the world where they saw economic opportunity. MR. LANDRUM stated, "As far as the proposed resolution is concerned, we agree that an opportunity to market natural gas in the North Slope as liquefied natural gas in the Pacific Rim should open up early next century. We also agree that there will be a very strong competition for that market and various projects around the Pacific Rim, especially those where expansions of existing capacity are possible. A North Slope project has some competitive disadvantages to overcome, particularly the long distances between where the gas is produced and where it could be liquefied and loaded onto tankers for export. However, it should be advantageous for the North Slope gas that most of the wells and production facilities on the North Slope are already in place." MR. LANDRUM stated that to successfully compete, a means must be found to reduce the investment required for a North Slope gas project. He said there was significant potential for lowering this investment requirement and the operating costs of the North Slope project through better technology and maximizing use of existing infrastructure. He felt it was important for the state to follow the development and issues involved and be prepared to assist, when needed, with expediting permits and approvals, as well as possibly adjusting physical terms to make the project more competitive. MR. LANDRUM said, "However, I would like to raise a bit of caution about the state becoming too involved in dealing directly with the potential customers, especially the Japanese. It has been our experience that the Japanese customers become uncomfortable with too much direct involvement in a project by the local government." Number 0438 REPRESENTATIVE SCOTT OGAN asked what the production capabilities were at Point Thompson. He asked whether it would be possible to develop Point Thompson as a "jump-start" to get the gas pipeline going, perhaps bringing Prudhoe Bay on later, for example. MR. LANDRUM responded that was possible. However, he did not believe the potential production rate had been determined yet. REPRESENTATIVE OGAN referred to other projects competing in the world market and asked if those would cause serious problems for Alaska getting into the market later. MR. LANDRUM replied that many projects, such as Natuna, were quite advanced. He suggested the result could be deferral of Alaska's place in the supply and demand forecast. However, he thought that sometime between the years 2005 and 2010, there should be ample opportunity to market the significant body of LNG in Alaska. Number 0650 CO-CHAIRMAN GREEN apologized for the late start of the meeting and noted that Representative Kubina, prime sponsor of HJR 54, was now present. BARBARA HUFF-TUCKNESS, Teamsters Local 959, testified via teleconference, saying there were over 5,000 working Teamsters in Alaska in the private and public sectors, all of whom favored passage of HJR 54. They perceived the resolution as a call for action. Ms. Huff-Tuckness said organized labor and Yukon Pacific Corporation were addressing an agreement to ensure Alaska hire and a plan of action to ensure that rural residents and Native Alaskans would not be excluded from job opportunities. "This is not the oil pipeline," she said. "This is an Alaska project by Alaskans and for Alaskans." Number 0899 MS. HUFF-TUCKNESS said this particular project was not an environmental issue but a jobs issue. She suggested it would reduce need for governmental aid to individuals and provide much- needed jobs for Alaskans. Number 1080 DAN LaSOTA, Assembly Member, Fairbanks North Star Borough, testified via teleconference. He referred to the assembly's Resolution 96-009, unanimously passed January 25, 1996, which supported HJR 54; a copy of that resolution was included in the committee packets. Mr. LaSota noted that he had also testified before the House Committee on Oil and Gas on an earlier version of HJR 54. He referred to page 3, line 9, and said he was pleased to see that language had been included. He said the current version of HJR 54 was most acceptable to the borough. "The bottom line is that we want the gas to get to the market and for our people to get to work," he concluded. Number 1163 MIKE MACY, Coordinator, TransAlaska Gas System (TAGS) Environmental Review Committee, testified via teleconference from Anchorage. He urged the state to consider environmental and socio-economic impacts. He discussed local hire and suggested the state conduct a survey to determine whether Alaska currently had the workers necessary for the project. To the extent there might be a shortfall, they wanted to see training programs for Alaskans, especially those from rural areas, so that the project could be built in-house. "Otherwise, the hundreds of millions of dollars the state will receive from this project will be frittered away on a tidal wave of nonresidents," Mr. Macy stated. He suggested no village had been more negatively impacted by the oil pipeline than Stevens Village. He wanted indigenous people along the pipeline to directly benefit from the project. MR. MACY stated, "The committee is not enthusiastic about the inevitable impact of an 800-mile, $10 billion-dollar pipeline and liquefaction facility construction project. But we have been encouraged by Yukon Pacific's openness and willingness to respond to our concerns to follow rather than subvert the law and make their project go without a slough of fiscal concessions from the people of Alaska. We're dismayed that the gas producers are still talking about alternative routes. There are significant economic and environmental arguments to using as much of the existing Alyeska TAPS infrastructure as possible. However, we worry that the producers may see these options as a clever way of avoiding their obligations to remove the oil pipeline and related facilities at the end of its service." MR. MACY continued, "We would prefer not to turn Anderson Bay into an industrial zone but we have three concerns about the [indisc.] a brand-new, state-of-the-art LNG facility to an aging, problem- plagued crude oil terminal. This is asking for trouble. The resulting exclusion zone, the area which has to be evacuated within ten minutes in the event of an LNG spill, would extend all the way to Valdez's waterfront. The people of Valdez will not stand for that level of risk. And the federal energy regulatory commission will not allow the commingling of [indisc. -- coughing] nation's domestic oil supply with an LNG export facility. It's appropriate that the legislature's taking an interest in North Slope gas export issues. However, we ask the legislature to put its money where its mouth is and make sure that the state agencies have enough resources to ensure that a gas project is done correctly, with maximum local hire and minimal avoidable impacts." Number 1389 MR. MACY pointed out that a strong regulatory presence lowered insurance rates and prevented unscrupulous companies from getting a competitive advantage over good corporate citizens, and prevented developers from shifting development costs onto the public and its resources, which was the real and unacknowledged national debt. He therefore urged restoration of full funding to the Department of Environmental Conservation, Department of Fish and Game, Department of Natural Resources and Department of Law. CO-CHAIRMAN GREEN said he would have to excuse himself shortly and turn the meeting over to Co-Chairman Williams. CO-CHAIR WILLIAMS noted there were two people in Kodiak waiting to give testimony on HB 118. He informed them that no testimony would be taken on that bill that day and that the committee would call them when a hearing was scheduled. Number 1506 JEFF LOWENFELS, President, Yukon Pacific Corporation, testified that Yukon Pacific was sponsor of the Alaskan gas export project, called the TransAlaska Gas System or TAGS project. "As most of you know, Yukon Pacific is a business unit of the CSX Corporation, a large, international transportation company headquartered in Richmond, Virginia," he said. "CSX has funded Yukon Pacific's successful efforts to permit, promote and advance the TAGS project." MR. LOWENFELS said the resolution represented an important advancement in the evolution of gas sales from Alaska. Its language and bipartisan sponsorship demonstrated a recognition of the promise this project held for all Alaskans, he said. More significantly, it sent a clear message to markets, and to competitors for those markets, that Alaska's representative body recognized the huge potential of Alaska's North Slope resources. "This is an extremely important threshold in the evolution of the TAGS project," Mr. Lowenfels stated. "This kind of action by the state of Alaska is exactly the kind of support other countries give our competitive projects." MR. LOWENFELS referred to a newspaper article from the Financial Times, included in the committee packets, and said the Jakarta government had 16 ministers pushing its Natuna project. The article showed a project that would cost $40 billion, the same size as Alaska's $13 billion project, seeking to sell gas for $4.50 to $5 to the same markets to which Alaska sought to sell its gas. That Indonesian project was aiming for construction to begin in 1997, he said. Number 1629 MR. LOWENFELS concluded by saying unanimous passage of the resolution would contribute to the TAGS project's success strategy by telling Alaska's markets, which Indonesia also sought to serve, that the legislature supported gas sales and that Alaska had a competitive strategy and was willing to act. CO-CHAIRMAN GREEN asked about the construction scheduled to start in 1997. MR. LOWENFELS responded that the article from the London-based Financial Times indicated that the Indonesian - Pertamina partnership's intention was to start construction in 1997 for a project that was, at a minimum, $8 billion more expensive than Alaska's project. Mr. Lowenfels believed they could therefore get into the marketplace before a less expensive Alaskan project could do so. "And it is something we all need to be very concerned about," he concluded. Number 1690 REPRESENTATIVE OGAN referred to the article and said it appeared that Exxon was willing to compete with whoever stands up. Buyers were to sign up before construction began next year. "So, they're obviously aggressively pursuing these customers, which, in my opinion, would compete with Alaskan customers and interests," he said. MR. LOWENFELS indicated there was no question that the Natuna project was competition to Alaska. Number 1794 REPRESENTATIVE RAMONA BARNES asked who had submitted the amendment in the packet. REPRESENTATIVE KUBINA said he had great problems with the amendment, which he thought substantially weakened the bill, especially the last portion, which removed lines 23 and 24 on page2. He asked if the work draft had been adopted as a committee substitute. REPRESENTATIVE BARNES moved that CSHJR 54, version D, dated 2/16/96, as a work draft. REPRESENTATIVE OGAN objected for purposes of discussion. He said he had agreed to move the amendment for sake of discussion, not that he necessarily supported it. Number 1869 REPRESENTATIVE KUBINA said the only difference in the work draft was the addition of a local hire statement on page 3. "And I think we left out the sending a copy to the Governor, and so we thought we should do that, since we're asking him to do some thing," he said. CO-CHAIR WILLIAMS asked if there was any objection. He noted that the amendment was tied into version D. REPRESENTATIVE OGAN withdrew his objection. CO-CHAIR WILLIAMS noted there was no objection and ordered that work draft D be adopted. He asked for the wishes of the committee. REPRESENTATIVE BARNES moved that CSHJR 54 move from committee with individual recommendations, and asked unanimous consent. REPRESENTATIVE PETE KOTT said he believed the original bill had a fiscal note. Number 1942 REPRESENTATIVE BARNES said, "I would move it with a zero fiscal note, because there is a fiscal note in here and I don't believe it's necessary." She asked unanimous consent. CO-CHAIR WILLIAMS asked if there was any objection. There being none, CSHJR 54 moved from the House Resources Committee.
| Document Name | Date/Time | Subjects |
|---|