Legislature(2009 - 2010)BARNES 124
04/13/2009 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HB163 | |
| HB217 | |
| SJR16 | |
| HJR33 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 217 | TELECONFERENCED | |
| + | SJR 16 | TELECONFERENCED | |
| *+ | HJR 33 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 163 | TELECONFERENCED | |
HB 163-ALASKA NATURAL GAS DEVELOPMENT AUTHORITY 1:06:23 PM CO-CHAIR NEUMAN announced that the first order of business is HOUSE BILL NO. 163, "An Act clarifying the purpose of the Alaska Natural Gas Development Authority; and relating to definitions of certain terms in AS 41.41." CO-CHAIR JOHNSON moved that the committee adopt version 26- GH1057\R, Bullock, 4/13/09 (Version R), as the working document. There being no objection, Version R was before the committee. CO-CHAIR NEUMAN referred members to the April 13, 2009, legal explanation received from Mr. Bullock in regard to the conceptual amendments incorporated into Version R. 1:07:15 PM CO-CHAIR JOHNSON asked whether Representative Seaton had reviewed the legal opinion as to the incorporation of his amendment regarding the [Alaska] outer continental shelf (OCS) [Conceptual Amendment 1 passed on April 11, 2009]. REPRESENTATIVE SEATON explained that his intent with the amendment was to take input of gas into a pipeline, not build a pipeline offshore to an OCS supply. Therefore, he continued, the wording in Version R accomplishes the goal of the amendment. 1:08:36 PM CO-CHAIR JOHNSON noted that Version R may not have incorporated Representative Guttenberg's amendment [Conceptual Amendment 2 passed on April 11, 2009]. REPRESENTATIVE GUTTENBERG replied that Version R does not. CO-CHAIR JOHNSON said he thinks Mr. Bullock has amendments that will do what Representative Guttenberg wants to do. REPRESENTATIVE GUTTENBERG moved Amendment 1, labeled 26- G1057\A.2, Bullock, 4/13/09, as follows: Page 2, line 2: Delete "the pipeline system project" Insert "[THE] pipeline system projects [PROJECT]" Page 2, line 11: Delete "markets" Insert "a market" Page 2, line 12, following "or": Insert "to a market in the state and" CO-CHAIR JOHNSON objected for purposes of discussion. REPRESENTATIVE GUTTENBERG said his intent is to ensure that every time a market or project is described it includes a market in the state. 1:10:25 PM DONALD BULLOCK JR., Legislative Counsel, Legislative Legal and Research Services, Legislative Affairs Agency, Alaska State Legislature, understood the intent of the amendment is to ensure that no matter the project, it include delivery to a market in the state. Therefore, he continued, Amendment 1 says that it be to a market in the state or to a market in the state and to alternative tidewater points, Cook Inlet and Prince William Sound. REPRESENTATIVE SEATON asked whether Amendment 1 would mean that an export market could not be built unless there is also some other delivery in the state. MR. BULLOCK responded that it avoids the issue of a pipeline that would bypass all the in-state markets by going just to tidewater and being exported. He understood the amendment's intent is to ensure that there is gas delivered from the project to a market in the state; whether or not some of the other gas is exported would not be affected. 1:12:15 PM REPRESENTATIVE GUTTENBERG, in response to Co-Chair Neuman, agreed [Amendment 1 was to the original version of HB 163, not Version R]. He said he believes that in Version R the amendment would apply to page 2, line 12, after the last "or". In further response, he said page 2, [lines 12-13], of Version R would therefore read: North Slope of Alaska or other regions of the state to market in the state or to a market in the state and to tidewater at a point on Prince William Sound 1:13:37 PM CO-CHAIR NEUMAN inquired whether Representative Guttenberg's intent is to ensure that gas coming down an in-state pipeline can only be sold to markets in the state. REPRESENTATIVE GUTTENBERG answered no. He explained that any gasline in the state under the Alaska Natural Gas Development Authority (ANGDA) has to have an in-state use component. If gas must be exported in order to make the project economical, some component of the project's gas will also be used in-state; a project could not be built just for export. It does not matter what is taken off for use in-state, it could be any of the hydrocarbons. 1:14:32 PM CO-CHAIR NEUMAN surmised that Amendment 1 would disallow running gas down a pipeline to Valdez for liquefaction and export. REPRESENTATIVE GUTTENBERG responded that some component of such a pipeline would have to be used for in-state market. CO-CHAIR NEUMAN said he is wary of the language. CO-CHAIR JOHNSON said his understanding of Amendment 1 is that it would assure off-take points somewhere along the pipeline for use of in-state gas and is therefore consistent with what was done for the "big line". He said he thinks it is consistent with what is needed. 1:15:48 PM CO-CHAIR NEUMAN moved that the line numbers in Amendment 1 be amended to conform to Version R. REPRESENTATIVE GUTTENBERG agreed. MR. BULLOCK clarified that to conform to Version R, Amendment 1 would need to be amended to read as follows: Page 2, line 3: Delete "the pipeline system project" Insert "[THE] pipeline system projects [PROJECT]" Page 2, line 12: Delete "markets" Insert "a market" Page 2, line 12, following "or": Insert "to a market in the state and" There being no objection, the amendment to Amendment 1 was passed. 1:16:49 PM REPRESENTATIVE SEATON outlined a scenario in which gas from the Nenana basin supplies Fairbanks prior to the building of ANGDA's line and then no one buys gas from an off-take on this line because it is more expensive than the Nenana gas. He asked whether Amendment 1 would then mean that the gas could not be exported because none is supplied for in-state use. In other words, a gas line could not be built unless it supplies gas to an in-state market, even if it provides access to supply. REPRESENTATIVE GUTTENBERG replied that that reading would be right should the market in the state for gas be satiated and there are economics for another line, which is something he is unsure he will see in his lifetime. However, he continued, he wants to ensure that the project description now, going forward, says that any project will have an in-state use component. MR. BULLOCK pointed out that the focus of HB 163 is on a project by the Alaska Natural Gas Development Authority and therefore Amendment 1 would not be applicable to any other pipeline. He said he believes the original intent of part of ANGDA was not only to get gas produced, but also to get it to Alaskans, so Amendment 1 follows the original intent that Alaskans would benefit from an ANGDA project. Amendment 1 would have no effect on a project outside of ANGDA, he pointed out. 1:19:28 PM REPRESENTATIVE EDGMON inquired whether the wording presently in HB 163 is sufficient to carry out the purpose of Amendment 1, which seems to add a finer level of detail to the meaning. MR. BULLOCK answered that he thinks Amendment 1 specifically clarifies that whether the option is to a market in-state or to tidewater, there is going to be a market in the state. As the bill is currently written, it could be read as an alternative - either to a market in the state or to tidewater. 1:20:15 PM REPRESENTATIVE SEATON argued that this constraint means that if Nenana comes on line and supplies gas cheaper to Fairbanks than could be supplied from the North Slope, ANGDA could not build a line to Valdez for export because it would not also be supplying gas for in-state. He said he thinks the taxation structure for exports provides a natural incentive for a supplier to first fill up as much of the local market as possible. He feared that, in the future, Amendment 1 could put a constraint on ANGDA's ability to build an export gasline. REPRESENTATIVE GUTTENBERG responded that his job as a legislator is to ensure that ANGDA's project, at this point, has an in- state component, and someone else can build a project that is outside of this. Until such time as the in-state market is satiated, he said, ANGDA's proposals should have a component for in-state use. 1:23:29 PM REPRESENTATIVE SEATON described a scenario in which gas is brought to [the Nikiski liquefied natural gas (LNG) plant] for export and Cook Inlet gas provides the supply for in-state use in Southcentral Alaska. He asked whether it is a net amount of gas that is being talked about or molecules of gas as regards to how the restriction would work. REPRESENTATIVE GUTTENBERG replied that when the development of projects in Southcentral, Southeast, and Interior Alaska have changed that much, there will likely be legislation brought forward that clarifies those purposes, the markets, and Cook Inlet exports. At that point he would consider all those changes, but right now on ANGDA's project he wants to make sure there is an in-state use component. 1:26:03 PM CO-CHAIR JOHNSON said he sympathizes with Representative Seaton, but thinks it is acceptable for someone with a project from the North Slope to Valdez with no in-state use component to have to come back to the legislature. Therefore, based on what he has heard from his constituents, the mandate in Amendment 1 for in- state supply is appropriate. For now the message must be very loud and clear to ANGDA, the governor, and the citizens of Alaska that the in-state use of natural gas is the top priority. He withdrew his objection to Amendment 1. 1:27:12 PM REPRESENTATIVE SEATON objected to Amendment 1, saying he wants to get the intent of the amendment on record. He asked whether it would be considered an in-state use of gas if a gasline is brought to Southcentral Alaska that is no larger than the export amount of gas from [the Nikiski LNG plant] and the plant could only get its export license renewed with that additional gas coming in, so it is a net export of that gas. Is it net, he asked, or since it comes into the pipeline system is it mixed gas and therefore the project could go forward, or would it have to come back to the legislature in order to be moved forward. MR. BULLOCK clarified that the policy aspect of this is to determine what the basic purpose of ANGDA is and what the kind of project is that ANGDA is developing. If the purpose is only to get gas produced in the state to get the state royalties and production tax, then it does not matter where the pipeline goes. But, if the purpose of ANGDA is also to make sure that Alaskans have the benefit of the gas resources, then identifying or requiring a certain amount to be available to a market in the state would be an alternative purpose of ANGDA. 1:29:21 PM REPRESENTATIVE TUCK outlined a scenario in which there is an existing ANGDA gasline serving both export and in-state uses, and a supplier wants to build a line that ties into the existing line, but that supplier's line would carry gas that is only for export. He offered his opinion that the supplier's line would fall outside of ANGDA's jurisdiction and would have to be done some another way. CO-CHAIR NEUMAN agreed that it is a question of how to mix the molecules. 1:30:07 PM REPRESENTATIVE SEATON said Mr. Bullock may have solved his problem with the word available. He moved to amend line 10 of Amendment 1 by adding the words "to be available" in front of "to a market in the state and". Thus, he explained, even if the economics are such that the market in the state does not wish to buy that gas, the gas would be made available in the proposed gasline. CO-CHAIR NEUMAN objected to the amendment to Amendment 1. REPRESENTATIVE GUTTENBERG said it is his hope that the gas be more than available should ANGDA builds a gasline from anywhere. Just saying make available does not make ANGDA responsible for guaranteeing that part of the project is in-state use, he argued. He said that he wants to ensure that a component of this project is specifically for in-state use and part of ANGDA's role is to make sure that happens. 1:32:09 PM CO-CHAIR NEUMAN inquired whether the scenario described by Representative Tuck, the mixing of molecules, would have any effect on this. MR. BULLOCK answered that the focus of ANGDA is for a project, more so than what goes into it. If this amendment is accepted and ANGDA's effort is toward the pipeline, then, whatever the gas source, there will be gas from somewhere flying through an ANGDA pipeline to a market somewhere in this state as well as possible export. REPRESENTATIVE SEATON argued that the project needs to make the gas available, but it should not be vetoed if there are cheaper alternatives for local areas and those areas do not want to buy the gas. The amendment to Amendment 1 makes the gas available to a market, which is the critical factor that members are trying to get to. The state's tax rate will stimulate any owner of gas to want to sell as much gas in-state as possible to reduce taxes. He agreed that in-state use is definitely the priority, but maintained that not enough due diligence has been done for putting the onus on gas owners that the gas must be sold in-state, possibly at less than market price, in order to do the project. He said he thinks this amendment is a way out. 1:34:37 PM REPRESENTATIVE TUCK said he thinks the language in the proposed original amendment allows for both export and in-state use of gas, which is the original intent of ANGDA. He expressed his concern that accepting the amendment to Amendment 1 will allow the building of pipelines for export only. MR. BULLOCK recommended inserting "be available" before "to a market" on line 10 of Amendment 1. Thus, it would read: "or other regions of the state or be available to a market in the state and". REPRESENTATIVE SEATON said he understands Mr. Bullock's recommendation and would consider that. REPRESENTATIVE GUTTENBERG also understood Mr. Bullock's recommendation. CO-CHAIR NEUMAN removed his objection to the amendment to Amendment 1. There being no further objection, the amendment to Amendment 1 was passed. There being no objection, Amendment 1, as amended, was passed. 1:36:41 PM REPRESENTATIVE SEATON understood that Amendment 1, as amended, was conceptual. CO-CHAIR NEUMAN said correct. CO-CHAIR JOHNSON removed any objections he may have had on the table. CO-CHAIR JOHNSON moved to report the committee substitute for HB 163, labeled 26-GH1057\R, Bullock, 4/13/09, as amended, out of committee with individual recommendations and zero fiscal note. There being no objection, CSHB 163(RES) was reported out of the House Resources Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 163 04.13.09 Leg Legal Memo.pdf |
HRES 4/13/2009 1:00:00 PM |
HB 163 |
| CSHB163(RES) work draft.pdf |
HRES 4/13/2009 1:00:00 PM |
HB 163 |
| HB 163 Amendment 4.13.09.pdf |
HRES 4/13/2009 1:00:00 PM |
HB 163 |
| HJR 33.pdf |
HRES 4/13/2009 1:00:00 PM |
HJR 33 |
| HB 217.pdf |
HRES 4/13/2009 1:00:00 PM |
HB 217 |
| HJR 33 packet.pdf |
HRES 4/13/2009 1:00:00 PM |
HJR 33 |
| SJR 16 packet.pdf |
HRES 4/13/2009 1:00:00 PM |
SJR 16 |