Legislature(2003 - 2004)
03/17/2004 03:42 PM Senate RES
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SB 247-AK NATURAL GAS DEV. AUTHORITY INITIATIVE
CHAIR SCOTT OGAN called the Senate Resources Standing Committee
meeting to order at 3:42 p.m. Present were Senators Thomas
Wagoner, Ben Stevens, Kim Elton and Chair Scott Ogan. Senator
Ralph Seekins arrived shortly thereafter. The first order of
business to come before the committee was SB 247.
MS. MARY JACKSON, staff to Senator Thomas Wagoner, sponsor of SB
247, said the bill had been before the committee two times and
nothing had changed. The fiscal note is indeterminate.
CHAIR OGAN expressed concern over getting permits to build
something to tide water in Cook Inlet and sending a mixed signal
to the private sector that would invest in such a project.
At some point, we need to quit cutting bait and get
our lines in the water and decide what we're doing
here. I guess I want to get it on the record that at
some point in the very near future, we're going to
have to rally behind the project in this state.
SENATOR THOMAS WAGONER said this bill does what the governor
wants it do, which is establish a spur line to Cook Inlet, which
currently has state infrastructure for manufacturing in light of
the fact that Alaska is short on proven gas reserves.
MS. JACKSON informed the committee that she attended an Alaska
Natural Gas Development Authority (ANGDA) meeting in Kenai and
was heartened by comments from members about the need to
recognize the value of the Cook Inlet Basin. She pointed out
that there is no permit yet for the Cook Inlet or the
Southcentral route under the ANGDA. "Anything that can be done
to elevate the Southcentral and Cook Inlet Basin is of value to
the whole state."
SENATOR RALPH SEEKINS said he considered different possibilities
for getting a line to Cook Inlet, but after much thought
concluded that the market should determine which route would be
used rather than the government.
In that regard, I'm willing to take a look at
alternative routes to the ones that have already been
suggested, because I think it opens it to market
demand rather than legislative dictate. That's why I
intend to vote for this particular bill.
CHAIR OGAN responded:
I'm not going to object to the bill moving today, but
I do want to put on the record that a number of years
th
ago - this is my 10 year working on commercializing
natural gas; so I've got a little bit of history with
it - a number of years ago, we had representatives
that the governor's office hired, you might recall,
Senator Elton, the consultants in Taiwan and Korea....
who said that Alaska appears dysfunctional to the
market....
I agree with Senator Wagoner that at this point we
don't want to close off our options and we need to
keep all the tools we can in the toolbox. But, if we
have a viable investor, when that happens we need to
get unified and we need to send a positive message to
the people that are going to risk billions of dollars.
With that reservation on the record, I'm not going to
object to the thing moving out today, but I do want to
keep mindful of that.
SENATOR KIM ELTON said the chair had expressed his concerns, as
well.
I do have a concern that we are kind of all over the
dartboard on this and having more tools in the toolbox
isn't necessarily bad as long as we don't feel like we
have to use them all and have a defused effort.... I
also believe, that if in fact, there was an entity
that wanted to advance the possibility of delivering
to tidewater in Cook Inlet and it was a serious
interest, I think at that time, we could do it in two
weeks....
MR. HAROLD HEINZE, CEO, ANGDA, said he wanted to make sure that
the authority would be looking at delivering gas via a spur line
to the Cook Inlet area. His view is that from the 20,000 ft.
level, the different routes cost about the same.
We will definitely be doing this. It is one of the
most important parts of what the authority is about.
It is a mandate in the ballot measure as it was
passed.... In terms of determining the feasibility of
the project, I am not uncomfortable in adding that
part to the mission. If you told me I had to recommend
to you a choice between the two routes, I would be
extremely uncomfortable, but that would require a
great deal of work that we have neither the funding
nor time to do.
CHAIR OGAN said the feds hired a consultant who did a report on
gas in Cook Inlet and asked if the report was out yet.
MR. HEINZE replied that he is one of the reviewers of that
report in draft form and has had a chance to look through it.
The report basically says that there is more gas to be found in
Cook Inlet, but it is not cheap gas and that the price would go
up close to the price of gas in the Lower 48. That price is what
it takes to attract the capital necessary for exploration.
If we do the spur line, what I've roughly calculated
at this point and it seems to be a similar number to
what they have calculated, is that the price in this
area would be around $1 to $1.50 less than the price
in the Lower 48. So, that is some advantage of this in
terms of pricing and it has to do with the fact that
there's a different tariff to the Lower 48 than there
is to here.... A lot of that has to be tested.
I will tell you also I have some other reports in
draft form that don't necessarily reach that same
conclusion. I am unable to tell you at this point how
the jury will come down in terms of the different
viewpoints as they exist.
CHAIR OGAN said he would be interested to see what dollar amount
gas would actually have to get to amortize a spur line. There
were no further questions.
SENATOR WAGONER moved to pass SB 247 from committee with
individual recommendations and attached fiscal note. There were
no objections and it was so ordered.
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