Legislature(2013 - 2014)BARNES 124
02/15/2013 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HB72 | |
| HB4 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 72 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 4 | TELECONFERENCED | |
HB 4-ALASKA GASLINE DEVELOPMENT CORP; RCA
3:40:16 PM
CO-CHAIR FEIGE announced that the next order of business would
be SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 4, "An Act relating to
the Alaska Gasline Development Corporation; making the Alaska
Gasline Development Corporation, a subsidiary of the Alaska
Housing Finance Corporation, an independent public corporation
of the state; establishing and relating to the in-state natural
gas pipeline fund; making certain information provided to or by
the Alaska Gasline Development Corporation and its subsidiaries
exempt from inspection as a public record; relating to the Joint
In-State Gasline Development Team; relating to the Alaska
Housing Finance Corporation; relating to the price of the
state's royalty gas for certain contracts; relating to judicial
review of a right-of-way lease or an action or decision related
to the development or construction of an oil or gas pipeline on
state land; relating to the lease of a right-of-way for a gas
pipeline transportation corridor, including a corridor for a
natural gas pipeline that is a contract carrier; relating to the
cost of natural resources, permits, and leases provided to the
Alaska Gasline Development Corporation; relating to procurement
by the Alaska Gasline Development Corporation; relating to the
review by the Regulatory Commission of Alaska of natural gas
transportation contracts; relating to the regulation by the
Regulatory Commission of Alaska of an in-state natural gas
pipeline project developed by the Alaska Gasline Development
Corporation; relating to the regulation by the Regulatory
Commission of Alaska of an in-state natural gas pipeline that
provides transportation by contract carriage; relating to the
Alaska Natural Gas Development Authority; relating to the
procurement of certain services by the Alaska Natural Gas
Development Authority; exempting property of a project developed
by the Alaska Gasline Development Corporation from property
taxes before the commencement of commercial operations; and
providing for an effective date."
CO-CHAIR FEIGE opened public testimony on HB 4.
3:40:37 PM
TERRY HINMAN, Community Advisory Committee for Alaska Stand
Alone Pipeline (ASAP), paraphrased from a prepared statement
[Included in members' packets]:
I live north of Healy in the Denali Borough and
represent Denali Borough on the ASAP Community
Advisory Committee. My time and my expenses are borne
by myself. I'm not funded by any entity or any
affiliation.
I believe the Alaskan "Resident" pipeline is at this
time the only real pipeline project with tangible
substantial assets including route, right of way, and
environmental impact study. Further, I feel we are at
a critical time with energy costs, certainly in the
Interior, and depending on the discovery and
development of more gas in SouthCentral and the Cook
Inlet Basin, potentially all of Alaska is at risk for
excessive energy costs.
I believe the Alaska Stand Alone Pipeline project
offers a long term, approximately 100 years, of
solution for the largest number of Alaskans. True,
the pipeline itself would traverse a relatively small
portion of the state, but the pipeline would serve a
large population. Also, with the lean gas scenario,
which is now proposed for the Stand Alone Pipeline,
which includes methane and propane, so the ability to
deliver propane at a much lower cost via the river
system, highway system, and ocean exists.
Additionally, the ability to generate much lower cost
electricity delivered via the grid. The energy
situation in the Interior is critical. Some small
businesses have closed due to excessive costs and more
may also. Personally, I have seen my energy costs
soar to the point I have to make a decision on how
long I can afford to live here. I am retired so I
live on a fixed income, yet with increasing light and
heat costs I am at the juncture to go back to work or
leave where I live. I'm fortunate that physically I
can go back to work, for others that is not an option.
Many who watch their savings and finances erode at an
increasing rate just to stay warm are at the breaking
point. When staying or leaving becomes solely cost
driven with the largest expense being energy the math
and decision become obvious. To some the loss of
retirees or other residents is of little consequence
however more than the impact of the loss of a
participant in the economy is the loss of the skill,
knowledge, wisdom, and experience. The greatest loss
is the hours of volunteering. HB 4 is a huge step in
taking action to move forward with an energy plan.
3:46:30 PM
REPRESENTATIVE SEATON emphasized that the State of Alaska did,
indeed, consider that seniors, and others, were valuable to the
state.
MR. HINMAN clarified that it was difficult to place a value on
those contributions to the communities and the state. He stated
that there were many people who had to consider departure from
Alaska because of the high cost of living.
3:48:23 PM
BILL SHEFFIELD declared that he was in support of the in-state
gas line, and that he had spoken to many groups throughout the
state in promotion of the gas line. He stated that it was
important to Alaska and Alaskans. He reported that Alaska had
been granted statehood more than 50 years ago because the state
had resources to "take care of ourselves, and it's time we
started to do it." He pointed to the importance of gas, and
noted that Anchorage was "running out of gas." He listed some
large businesses that had a shortage of gas, and shared the
importance to the railroad of gas shipment on it. He suggested
that more jobs would be created with manufacturing expansion,
instead of shipping out gas. He announced that it was important
to Alaskans, and that the legislature should appropriate the
necessary $320 million for the Alaska Gasline Development
Corporation (AGDC), in order to move into the open season, at
which point the questions would be answered. He opined that
this commitment would result in a contract by 2016, with gas in
Fairbanks by 2019. He stated that gas could be trucked, and
propane could be made available on the river systems. He urged
moving forward to get AGDC into the open season.
3:52:50 PM
KEN HALL declared that this was a tremendous opportunity for the
gas line to move forward, and that proposed HB 4 was an
improvement over previous proposals. He stated that it would be
a travesty to not allow this to move forward, as it provided an
opportunity to get gas into Fairbanks and develop businesses.
He offered his belief that the legislature had concerns for the
amount of control to relinquish to the AGDC, and recommended
that AGDC be run as a state operated corporation, similar to
Alaska Housing Finance Corporation (AHFC). He opined that it
would then run more smoothly. He expressed support for proposed
HB 4, as it benefitted all Alaskans.
3:55:51 PM
WILLIAM WARREN stated that the past failure to bring natural gas
to Alaskans had resulted in a "full blown crisis, not just a
tough spot, but a crisis." He declared that he would need to
import gas to run his ranch. He pointed out that the Cook Inlet
natural gas supply was still an unknown. He listed the previous
advocates and programs for a gas pipeline. He stated, "this is
our way out." He announced that it was necessary to move to
open season in order to better "know what we have" and that he
supported a high pressure pipeline to transport the natural gas
liquids (NGLs). He acknowledged his support for other forms of
energy, including tidal and wind tunnels, but emphasized that it
was now necessary to move forward with this program. He
endorsed the proposed bill.
4:00:43 PM
RON LONG, Assistant City Manager, City of Seward, shared that he
was also a member of the Community Advisory Committee for Alaska
Stand Alone Pipeline (ASAP). He affirmed that Seward did not
have natural gas, and that home heating costs were very high,
often higher than a mortgage payment. He reflected that,
although ASAP would not immediately bring gas to Seward, it
would keep electricity costs from increasing so dramatically.
He surmised that this project was "not incompatible with the
governor's big line proposal... nor was it incompatible or a
disincentive to the folks that are doing some pretty exciting
things in Cook Inlet." He opined that this was the only
solution for bringing Alaska gas to Alaskans first. He urged
that this pipeline project be moved along toward an open season
as expeditiously as can responsibly be done. He declared that
many challenges existed to obtain low cost energy and prevent
cost increases.
4:03:43 PM
JIM PLAQUET, Alaska Industry Support Alliance, declared that
"Alaska needs energy and HB 4 provides the Alaska Gasline
Development Corporation to serve as Alaska's natural gas
pipeline corporation, giving Alaskans the needed energy they
need for space heating and economic survival." He cited that
the proposed bill would direct AGDC to carry 500 million cubic
feet of gas per day, at the lowest possible cost, from the North
Slope to Fairbanks and SouthCentral Alaska. He commented that
proposed HB 4 would also consider other in-state gas pipeline
projects, as well as participation in a larger pipeline to
tidewater with a liquid natural gas export component. He
detailed that the proposed bill would avoid duplication of state
efforts and spending, while calling on state and local agencies
to assist and share information. He expressed that this
legislation would reduce the rates paid for gas. He reported
that proposed HB 4 would waive property taxes during pipeline
construction, requiring that local resources be made available
at usual rates, and not rolled into the costs Alaskans would pay
for the gas. He summarized that proposed HB 4 was the vehicle
to supply the energy needs for Alaskans.
4:06:42 PM
RICK ROGERS, Executive Director, Resource Development Council,
pointed out that the Resource Development Council (RDC) was a
statewide business association which represented the forestry,
oil and gas, mining, tourism, and fishing industries, with a
mission to grow Alaska's economy through responsible resource
development. He affirmed that RDC supported proposed HB 4, and
he reflected on the diversity of RDC, in order to appreciate the
significance of its support. He explained that RDC represented
the producers of energy resources, and included development and
exploration companies of all sizes. He noted that RDC also
represented rural, urban, commercial, and residential energy
consumers. He reported that RDC closely reviewed proposed HB 4,
to ensure that the bill "did not pit one energy resource against
the other." He established that the best energy solutions for
Alaskans were the ones that provided the best value for
consumers, and balanced low cost with reliability over the long
term. He offered that the "invisible hand of the free market"
would result in the best energy solutions for Alaskans. He
indicated that the proposed bill would supply the necessary
organization structure, tools, and resources to advance an in-
state gas project to an open season. He declared that the open
season would allow a project to succeed or fail on its economic
merits. He expressed hope for a large diameter pipeline to
tidewater, which would render the stand-alone gas pipeline
unnecessary. He noted that proposed HB 4 would then allow AGDC
to assist with expansion of intrastate gas transportation. He
suggested that the AGDC enabling legislation be modified to
consider sunset language should its mission become obsolete. He
ascertained that the project viability would be uncertain until
it reached an open season. He observed that the deliverance of
reliable and cost effective energy to Alaskans was critical to
future prosperity, and he declared support for the proposed
bill. He referenced a letter of support from RDC, dated
February 1, 2013 [Included in members' packets.]
4:10:44 PM
ALAN LEMASTER reported that his business operations costs had
increased every year, "most of which can be directly attributed
to the ever increasing cost of energy, both heating oil and
electrical power." He described the ad hoc organization, the
Alaska Natural Gas Pipeline Coalition, which had formed to bring
to the attention of the legislature that the best route for
providing the lowest cost energy to most Alaskans was the Trans-
Alaska Pipeline System (TAPS) along the Richardson Highway
corridor. He listed the members of this coalition to include
the Cities of Valdez, Delta Junction, North Pole, and Fairbanks,
as well as the North Star Borough, Copper Valley Chamber of
Commerce, Copper Valley Electric Association, the Alaska
Municipal League, and the Copper Valley Development Association.
Each member had written a resolution which stated support for an
All Alaska Natural Gas Pipeline from the North Slope to Valdez,
with a spur line to Anchorage, to supply 80 percent of the
population of Alaska with low cost energy. He declared that it
would be necessary to export a significant amount of the natural
gas in order to make the project economical. He opined that
these profits could exceed the value of the Permanent Fund. He
endorsed continued opposition to any efforts for developing a
natural gas line along the Parks Highway corridor, and stated
support for the route along the aforementioned Richardson
Highway corridor.
4:13:46 PM
REPRESENTATIVE SEATON requested copies of the aforementioned
resolutions.
MR. LEMASTER agreed to send in the resolutions.
4:14:57 PM
JASON HOKE, Executive Director, Copper Valley Development
Association, declared that the proposed bill would advance
Alaska, and was the first in many incremental steps to move all
the regions of the state into development and prosperity. He
clarified that the Copper Valley Development Association was in
support of an in-state gas pipeline, and "we are agnostic about
placement." He suggested that this "is the first domino for the
state that will set off a bunch of other energy solutions for
Rural Alaska." He declared support for proposed HB 4,
suggesting that it was time for "getting something done; I think
we all need to stop bickering about who controls what and where
it's gonna go, and let's just get 'er done."
4:16:43 PM
MERRICK PIERCE declared that "the bullet line is an uneconomic
boondoggle. The project does not have economy of scale and
seeks to convey gas to a region of Alaska that has a 200 year
gas supply." He pointed to the abundance of dry natural gas, 19
trillion cubic feet in Cook Inlet, as estimated by scientists at
US Geological Survey (USGS) and the Department of Energy, which
was perfect for home heating and electrical generation. Based
upon the use of 240 million cubic feet of use per day, this
would last for more than 200 years. He compared the PFC Energy
capital expenditure estimate of $2 billion over ten years for
drilling out Cook Inlet with a high end cost estimate for the
bullet line of $10 billion. He reported that a bullet line
supplying 500 million cubic feet of gas per day would envision
no more natural gas from Cook Inlet, and that in-state gas
consumption would double in the near future, which he stated was
"ridiculous." He shared that the AGDC had privately stated it
would export any surplus gas, but he pointed out that the Henry
Hub price for gas was very low. He declared that money should
not be wasted on this project as it was "patently uneconomic,"
and, instead, focus on a short term solution for Fairbanks,
which was to pipe natural gas from Big Lake and an existing
Enstar pipeline with unused capacity. Using a publicly owned
right of way traded by AGDC from Big Lake, a pipeline could be
built within a year for $200 million, which was half the cost
the proposed bill was seeking solely for studies. He spoke
about a big pipeline, and noted that there were almost 19 LNG
export projects in North America either under review or under
construction, which would compete with Alaska. He declared that
the key to success were a pipeline and tankers big enough to
have economy of scale. He explained that the deep water, ice-
free Port of Valdez had the existing infrastructure. He opined
that it was better to invest in an All-Alaska gas line, if the
20 year LNG contracts could be secured. He summarized that,
instead of spending the money from proposed HB 4, the same
amount of money should be used to build the aforementioned small
bore pipeline from Big Lake to Fairbanks, while a large pipeline
should also be started so that Alaska did not lose the world
market contracts.
4:21:20 PM
BILL WALKER explained that proposed HB 4 had morphed into a $7 -
$10 billion, 36 inch mega-project, which would be the largest
pipeline project built in America. He reported that it was
estimated to take 10 years to build, but that Fairbanks needed
gas much sooner. He declared the need for a more efficient,
quicker project and referred to an earlier study which projected
the cost for LNG to Cook Inlet to be about $80 million, and
completed within 18 months. Mr. Walker expressed his concern
that an earlier open season on September 14, 2012 had not
generated any response [from the legislature], as there had been
a focus, instead, on the proposed HB 4 project. He suggested
that more immediate options for gas to Fairbanks from Cook Inlet
were ready to move forward, and did not require $400 million of
studies. He declared that a 10 year construction project did
not resolve the immediate needs for Fairbanks or Cook Inlet. He
asked that all other options be considered prior to funding
another mega-project.
[HB 4 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB04 Fact Sheet.pdf |
HRES 2/15/2013 1:00:00 PM |
HB 4 |
| HRES HB 72 PFC Energy 2.15.13.pdf |
HRES 2/15/2013 1:00:00 PM |
HB 72 |