Legislature(2009 - 2010)SENATE FINANCE 532
04/14/2009 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB171 | |
| SB177 | |
| HCR2 | |
| HB199 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 171 | TELECONFERENCED | |
| += | SB 177 | TELECONFERENCED | |
| + | HCR 2 | TELECONFERENCED | |
| + | HB 199 | TELECONFERENCED | |
| + | TELECONFERENCED |
CS FOR HOUSE CONCURRENT RESOLUTION NO. 2(RES) am
Requesting the governor to provide energy security for
all Alaskans first by pursuing development of a natural
gas bullet pipeline from the North Slope to the Cook
Inlet region; and requesting the governor to identify
and negotiate where appropriate with one or more
persons capable of producing natural gas from the Gubik
area, and other areas on the North Slope if necessary,
in sufficient quantities to support the energy needs of
Alaskans and a bullet pipeline project.
9:23:17 AM
REPRESENTATIVE JAY RAMRAS, SPONSOR, provided an overview of
the history of the legislation, which started as four
separate resolutions in the House that broke the
construction of an in-state gas bullet line into four
incremental steps. The first step was to work on supply of
the gas, whether from Gubik field or the North Slope as a
contingent supply. The second step worked on the
transportation facility. The third step addressed creating a
volume of demand that would fill the pipe and bring the
tariff down for all users. The fourth step addressed export
demand and attempted to obtain sufficient components to fill
a 500 million cubic feet per day (MMcf/d) pipeline, or
approximately 180 billion cubic feet per year (Bcf/y).
Representative Ramras noted that the Railbelt region needed
approximately 60 billion Bcf/y of gas for all residential
and light commercial operations. A restart of the Agrium
facility would require another 60 Bcf/y. Another 60 Bcf/y
would be required for export.
Representative Ramras reported that the original four
resolutions were consolidated into one as they moved through
the House. He stated satisfaction with the legislation and
the progress that Harry Noah [Project Manager, In-State
Gasline] is making on behalf of the state. He noted that Mr.
Noah is having constructive conversations with Agrium and
that there has been discussion regarding synthetic fuels. He
referred to a pending interim presentation from Doug Ward
with Alaska Ship and Dry Dock in Ketchikan regarding
building small ships that may be able to deliver fuel to
small Alaskan coastal communities and thereby lower energy
costs to rural Alaska.
9:26:57 AM
Representative Ramras referred to a visit to Dillingham
during the previous summer's energy hearings. The energy
committee took public testimony from 80 to 100 residents
that the capacity to make ice would cut down on fuel use. He
thought that natural gas delivered through small ships could
play a significant role in increasing the gross domestic
product of a community such as Dillingham. The shapers of
HCR 2 felt that the governor should take a more aggressive
role in shaping an in-state bullet line.
Representative Ramras thought that progress is best made
incrementally.
9:28:50 AM AT EASE
9:29:31 AM RECONVENED
Representative Ramras opined that the administration could
be doing more, although the drafters are satisfied with the
appointment of Mr. Noah as an in-state gas coordinator. The
legislation encourages the administration to be more
proactive. He listed actions he thought would be prudent,
including sending representatives to Ketchikan to talk with
Mr. Ward, talking with the U.S. Department of Energy
regarding an expansion of Alaska's export capacity, and
reaching to the U.S. Department of Defense through the
executive branch to discuss gas-to-liquids development in
Southcentral Alaska. He thought that the state needed to
develop energy in Alaska over the next fifty years. He did
not think AGIA or Denali would offer a solution for many
parts of the state. In the current uncertain economic
climate, he thought the state should develop energy for in-
state use.
9:31:46 AM
Co-Chair Hoffman referred to the last resolve on page 4 and
asked the rationale for choosing the June 1, 2011 date.
Representative Ramras answered that the date had been taken
from Mr. Noah's timeline and he thought it was a solid one.
Initially the date had been November 2010, but he thought
the date should be tied to the next election cycle. He
relayed that Mr. Noah believed a pipeline company would be
selected and the project sanctioned by June 1.
Senator Olson queried the cost over time of building more
than one pipeline. Representative Ramras referred to
discussions with the Federal Energy Regulatory Commission
(FERC). Many people have concerns that neither of the large
diameter pipelines would be built. He thought Alaskans would
not tolerate a re-gas certificate for liquid natural gas
(LNG) for the Conoco facility. He emphasized that the option
of importing LNG for interior Alaska was not acceptable to
most Alaskans.
Representative Ramras opined that if Alaska builds a
transportation facility, the market would take care of
itself when it comes to a large diameter pipeline. He
reiterated the need for steady incremental progress. He
thought energy was a cornerstone for economic independence
for Alaska. The state would not be dependent on credit
markets and multi-national agreements.
9:36:42 AM
Senator Olson asked the approximate cost of the bullet line.
Representative Ramras replied $200,000 per diameter inch per
mile; a 20-inch line would cost around $4 million per mile,
bringing the cost of an 800 mile pipeline to $3.2 billion.
Allowing a 20 percent cost overrun would bring the total to
$4 billion. He thought the money would be well spent.
Representative Ramras added that the gasline could be built
with private sector capital and did not have to be built by
the state.
Senator Thomas questioned the timeline. Representative
Ramras replied that there could be two failed open seasons,
one with TransCanada and a contingent open season with
Denali, unless fiscal uncertainties were addressed. He
thought an in-state gasline would provide opportunity for
Nenana Basin to prove potential, as well as Gubik field and
North Slope fields. He stated that the purpose of the
resolution was to encourage the administration to put more
resource into developing gas for in-state use.
9:39:20 AM
Senator Huggins commended Representative Ramras on his
initiative. He reminded the committee about the extensive
support from citizens regarding developing gas for in-state
use. He stated support for Mr. Noah.
Senator Huggins queried potential for development in the
Nenana Basin, which would provide a shorter pipeline to
Fairbanks.
Representative Ramras gave an overview of three possible gas
sources, which are being monitored by Mr. Noah:
· Gubik: the supply is promising. The field has about 600
Bcf. A gas pipeline with 180 Bcf/y for 20 years would
need 3.6 trillion cubic feet (Tcf). The difficulty is
that Anadarko made mistakes at the corporate level,
which have compromised its ability to invest in Alaska.
· Nenana Basin: the commercial viability has yet to be
proven. There are problems with the Army Corps of
Engineers related to building a road. The basin is
attractive but has a four-tiered process of determining
success. The first would be power generation. The
second is to have enough gas to build a very small
diameter gasline to Fairbanks, or some modest LNG
facility that would allow gas to be trucked there. The
third would be sufficient gas supply to move it north
as well as south to Southcentral. The fourth would be
to have enough gas to do those things and also
eventually nominate gas into the large diameter
pipeline. Proponents have testified that they
anticipate finding between 20 and 50 Bcf this year and
potentially as much as 200 Bcf in the basin. He stated
that the basin has characteristics similar to Cook
Inlet Basin, which is now producing only 10,000 barrels
per day. Smaller pools of gas are expected in Nenana
Basin.
· North Slope: 60 miles further north with the most
expensive terrain to build a gas pipeline over. The
line has the support of the mayor of the North Slope
Borough. The gas would be "wet gas" and require gas
treatment facilities.
9:44:57 AM
Senator Huggins asked about right-of-way status.
Representative Ramras replied that there are two routes
proposed:
· Parks Highway route: proposed by ENSTAR and the
preferred route of Mr. Noah.
· Glennallen route: preferred route for Alaska Natural
Gas Development Authority (ANGDA). He opined that ANGDA
does not yet recognize Mr. Noah and needs to cooperate
with him. The development authority claims that the
seven miles through Denali National Park is
unacceptable. Senators Murkowski and Begich have
introduced legislation that would allow the pipeline to
go through the same right-of-way corridor that the
rail, road, and electric transmission lines pass
through. The Glennallen route is longer and more
expensive than the Parks Highway route.
9:46:58 AM
Co-Chair Hoffman pointed to page 2, line 3 and queried the
placement of the "Be It Resolved" before the "Whereas."
Representative Ramras answered that he was not sure why the
bill was drafted in that format.
Co-Chair Stedman asked for the issue to be checked.
Representative Ramras agreed to check.
Senator Thomas noted that the resolution attempts to focus
the administration on the regulatory as well as economic
issues that need to be addressed and evaluated.
Representative Ramras replied that Mr. Noah would like to
lessen risk by having ANGDA be the applicant to the
Department of Natural Resources (DNR) for an in-state gas
pipeline. He thought that once there is a permanent
pipeline, a determination could be made regarding which
entity would be best. He thought the entity would be ENSTAR.
Representative Ramras reminded the committee that ENSTAR has
testified that they have $1 billion in cash and $3 billion
worth of credit, and are ready to build the gas pipeline. He
proposed that only government was standing in the way. The
intent of HCR 2 is to tell government as strongly as
possible to get out of the way and let the private sector
build the line.
9:50:42 AM
Co-Chair Stedman opened public testimony.
PAUL FUHS, LEGISLATIVE DIRECTOR, ALASKA GASLINE PORT
AUTHORITY (AGPA), thought the resolution put government in
complete control instead of getting government out of the
way. He noted similar issues in the past with the Alaska
Gasline Inducement Act (AGIA) trying to control decisions
instead of letting the market guide them. He stated that
ENSTAR could build the pipeline. He did not think the
question of cost risk had been addressed and opined that
rushing into a project could cost Southcentral consumers.
Once the certificate is granted, no other project will be
allowed into the market until the debt is paid. There could
be a risk that the state would then not be able to bring in
cheaper gas if it became an option.
Mr. Fuhs referenced another in-state gas project that would
bring gas into Valdez. He stated that the Valdez project was
just as legitimate. He thought that enough volume was key to
getting reasonably priced gas to Southcentral Alaska. If the
state counts only on its own volume, the gas would be
extremely expensive and people would not object to importing
LNG at a third of the cost of an in-state gasline.
Mr. Fuhs stated that AGPA requested that the legislation be
amended to support an export license for any in-state
gasline instead of focusing on one entity. He emphasized the
importance of supporting all options.
9:53:56 AM
Co-Chair Hoffman MOVED to report SCS CS HCR 2(RES) out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
SCS CS HCR 2(RES) was REPORTED out of Committee with no
recommendation and no fiscal note.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CSHB 199(FIN) am Non Trans Stimulus_Funding Summary_Version P.A.pdf |
SFIN 4/14/2009 9:00:00 AM |
HB 199 |
| OMB HB199 Amendments 04.14.2009.pdf |
SFIN 4/14/2009 9:00:00 AM |
HB 199 |
| Sponsor Stmt HCR 2.pdf |
SFIN 4/14/2009 9:00:00 AM |
HCR 2 |