Legislature(2011 - 2012)BUTROVICH 205
03/30/2012 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB145 | |
| SB215 | |
| SB219 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 145 | TELECONFERENCED | |
| += | SB 215 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | SB 219 | ||
SB 215-GASLINE DEV. CORP: IN-STATE GAS PIPELINE
3:53:34 PM
CO-CHAIR PASKVAN announced consideration of SB 215 and that the
committee had invited testimony.
3:54:51 PM
CARL HANNEMAN, International Tower Hill Mines, Fairbanks, AK,
thanked the committee for the opportunity to offer their
comments in support of their efforts to bring more cost
effective energy to the Interior as soon as possible. He said
that Tower Hill Mines is new and is conducting a feasibility
study on the potential development of the Livengood Gold project
located by paved highway 70 miles north of Fairbanks. With a
gold resource of over 20 million ounces, he said this project is
ranked in the top tier of undeveloped gold deposits in the
world. The project is planned as a large surface mine with a
capital investment in excess of $1.6 billion, a mine life of 23
years, over 1,000 jobs during construction and approximately 500
long term jobs for generations of Alaskans.
MR. HANNEMAN said they didn't have enough of the facts to be
able to choose between specific projects or legislation, but he
said they support the work legislators are going to bring real
solutions to the high cost of energy in Interior Alaska. Tower
Hill had been working with the Fairbanks Chamber of Commerce to
develop a unified position that recognizes the need for both
short-term and long-term solutions, and resolution of those
challenges could make a meaningful difference to a long-term
project like the one in Livengood.
He said they believe the community could benefit from a short
term project like natural gas trucking that could result in up
to $40 million in annual energy savings and allow the community
to begin preparing for a permanent natural gas pipeline project.
The Healy Clean Coal project could create similar savings if it
could ever come on line; it is now struggling through the
permitting process. Mr. Hanneman said the community should
aggressively support both of these projects, because they can
provide real meaningful relief in the two-to-three year time
period.
MR. HANNEMAN said mid-term solutions are significant, too, and
the gasline in SB 215 is one of those. They believe that tariffs
could be adjusted and incorporated so that the Interior could
achieve long-term fair pricing stability that would "open up"
the community.
In conclusion, he said they support the gasline proposals with
the necessary engineering and environmental work on an expedited
basis. The state should also continue to pursue the economic
long-term energy solutions such as Susitna/Watana. All together
the short-term, mid-term and long-term solutions could make a
meaningful difference.
3:58:37 PM
MICHAEL LAMB, CFO, Fairbanks Northstar Borough, Fairbanks, AK,
said he was pleased to hear Mr. Hanneman's comments and that he
also supported SB 215.{ When the gas pipeline gets built, it
will actually allow for gas to flow in both directions, which is
a long-term win-win conclusion. The cost of heating fuel is
dramatic in the Interior and hundreds of millions of dollars
leave the community because of it. This is the only project that
is really doable in the near-term timeframe, and he would
support it in any way he could.
MR. LAMB said many discussions had taken place about how the
cost of energy impacts the Department of Defense facilities and
it has become even more critical in looking at what is happening
to the federal budget.
4:02:21 PM
CO-CHAIR WAGONER asked how the bases get their power now.
MR. LAMB replied that they use coal generation, but a lot more
was getting done by diesel. In addition, Fairbanks has issues
with federal PM2.5 requirements and clean air. There are a lot
of reasons that getting clean energy, including converting
existing coal to natural gas, makes a lot of sense.
CO-CHAIR WAGONER asked if the federal government is committed to
taking the coal-fired generation of their power generation off
line and installing gas generation or buying it from somewhere
else in the immediate area.
MR. LAMB replied that he couldn't speak for the federal
government, but he understood that four power plants were in the
process of being switched in Eielson and it looked like things
in general were going in that direction.
4:05:17 PM
At ease from 4:05 to 4:06 p.m.
4:06:47 PM
GENE THERRIAULT, Vice President, Resource Development and
External Affairs, Golden Valley Electric Association (GVEA),
Fairbanks, AK, supported SB 215 and said as a large industrial
consumer, they are anxiously watching proposals that can deliver
gas to the Interior. He said GVEA provides electric service to
44,000 individual customer accounts in Interior Alaska going
from Fairbanks to Fort Greely on the Richardson Highway and
Fairbanks to Cantwell on the Parks Highway, an area that is home
to approximately 100,000 Alaskans.
MR. THERRIAULT said they are also closely monitoring
announcements regarding gas development in the Cook Inlet basin
whose preliminary results have the potential to assist with the
energy needs if surplus quantities of gas are available at an
affordable price and for a long-enough period of time. If these
parameters are met, GVEA would be very interested in switching
as much of their oil fired generation as possible to natural
gas.
MR. THERRIAULT said to facilitate meeting that goal, GVEA
supported state participation in the development of a pipeline
system and an associated tariff structure that would assure
Interior residents would be able to access the state natural gas
resources. To that end, they support the efforts of Senator Joe
Thomas on SB 215 and appreciated that the legislation proposes
to use a portion of the right-of-way.
To ensure that a pipeline will have the largest possible natural
gas market to serve immediately upon completion, GVEA is
currently working on a project to transport gas to the region
via trailer. Such a project will allow industrial and
residential use in the Interior to develop now, which will
improve the economics of a future pipeline. While GVEA still
believes that a large-volume pipeline may still be constructed
to serve an export market under AGIA, it is prudent to undertake
pipeline efforts that are focused on serving in-state needs. If
the governor's request that North Slope producers align under a
new effort to build a large pipeline to tidewater results in
moving forward, the infrastructure proposed by SB 215 would be
of tremendous value to continue serving in-state needs or to
potentially transport Cook Inlet or Nenana Basin gas to the
export line. In closing, he said that GVEA believed that
pipeline infrastructure supported by SB 215 will be important
infrastructure no matter how natural gas ultimately gets
developed across the state. As a result, they encourage the
passage of SB 215 from the committee today so that the matter
may be considered by the Senate Finance Committee.
4:10:22 PM
CO-CHAIR PASKVAN asked what the potential for gas would mean to
GVEA in providing power to the Tower Hill Mine, Pogo or some
other major development in the Interior.
MR. TERRIAULT answered because of some work they have already
done on trucking, GVEA knew if a gas product were to be
delivered to the turbine (a 12 bcf/plant that serves space heat
and some industrial needs) in North Pole that the price of gas
could be brought down to $8 to $10 and that would result in a an
overall savings of $30-40 million to current customers. New
generation might have to be brought on to serve a large new
project like Tower Hill Mine, but the existing plant was
designed specifically to be able to double its capacity. He
explained that it is basically a large aircraft engine with a
heat capture unit on the back end that generates steam that in
turn generates additional electricity. This backend unit was
oversized so that an additional jet engine, basically, could be
added to that facility; gas could fire it, too. The potential
savings, even though the plant would have to be upsized for a
100 megawatt mine coming on line, but they would hopefully still
be able to continue those savings.
CO-CHAIR PASKVAN thanked him and went to the invited testimony
saying they would have public hearings on SB 215 on Monday.
4:13:23 PM
FRED PARADY, Executive Director, Alaska Miners Association,
Barrow, AK, said SB 215 could bring gas to the Interior market
sooner than any other line. He said the association was
established in 1939 to represent the mining industry in Alaska
and they are composed of more than 1,400 individual prospectors,
geologists, engineers, vendors, suction dredge miners, small
family mines, junior mining companies and major mining
companies. They produce gold, silver, platinum, diamonds, lead,
zinc, copper, coal, limestone, sand and gravel, crushed stone,
armor rock and other materials who work throughout the state in
each of their legislative districts.
Based on the potential new finds showing up to 19 tcf/gas
modeled by the USGS, Mr. Parady said that SB 215 could bring gas
to the Interior sooner than any other line. It has the clear
advantage of 305 miles versus 737 miles for the ASAP line.
Because it's a shorter distance, the construction timeline is
shorter, too. It's cheaper to build, has better access to
transportation, supplies, infrastructure like railroads and
housing, and well-maintained roads. He said that many mines
along the way - Donlin and International Tower Hill - would have
access to gas sooner. The operating life of Pogo and Fort Knox
could be extended with more affordable energy on the GVEA grid.
MR. PARADY said that creating a larger market for Cook Inlet gas
would incentivize development and increase the economic
viability of bringing new finds on line. SB 215 helps to create
this larger market and it works with any pipeline being
discussed today and is not an either/or situation. Coming from
another western mining state, he could say that Alaska is
resource rich and infrastructure poor and they should load as
many options into the legislative pipeline as possible.
CO-CHAIR PASKVAN announced that Senator Thomas, sponsor of SB
215, was in attendance.
4:17:22 PM
JERRY CLEWORTH, Mayor, City of Fairbanks, Fairbanks, AK, said he
was encouraged by all of their efforts including the ones in SB
215. Everyone realizes there is a crisis in Interior Alaska and
the Bush community in terms of staggering fuel costs that take
any wealth out of it. If they are ever going to be compliant
with the PM2.5 (particle pollution) requirement, it will
probably be gas that will do it for them and they are working on
getting the distribution system in place.
CO-CHAIR WAGONER asked if he was talking about the distribution
system for just Fairbanks or the whole geographic area.
MAYOR CLEWORTH replied that the original distribution study
broke it down into the urbanized area where it would be simpler
to put down lines and the more questionable areas for private
companies. They want to get it to the most homes possible. The
Fairbanks Economic Development Corporation (FEDC) is
spearheading that along with the borough.
4:20:54 PM
BILL WALKER, Attorney, Walker & Levesque, representing the
Alaska Gasline Port Authority (AGPA), Anchorage, AK, brought
their attention to a big book he brought saying it was Volume 1
of two volumes of gasline announcements that have happened since
1987. Thinking about gas going north from Cook Inlet is the same
thought process as going south from Prudhoe Bay; everyone agrees
the best way to get more oil in the pipeline is to have a
gasline coming south. The same can be true for a Cook Inlet line
going north. A bigger market will work for either route, and if
you're looking for oil you can find oil or gas or both.
He related that the president of Buccaneer said Alaska is the
best place in the world to do business. He was very aggressive
about what was going to happen in Cook Inlet and the market
opportunities there were good for everybody. The obvious
positive for gas going from south to north was no need for gas
conditioning facility because gas is dryer.
He said they might want to consider a different route going
north. Some time ago, the Fairbanks Economic Development
Corporation did an analysis of the Parks Highway v. the
Richardson Highway and found a significant difference in the
population of the two; about 10,000 going north on the Parks and
about 18,000 going by way of Glennallen. But the analysis didn't
anticipate that Glennallen was the power generation hub for that
region and already had a transmission line between it and
Valdez. Power could be pushed through it into the Alyeska Marine
Terminal where they preferred using electricity for unloading
the tankers to using heavy sulfur diesel.
MR. WALKER said he found the Mining Association's conclusion
interesting in comparing the developable resources going up the
Parks v. the Richardson and concluded that the difference was
that the Richardson route would have between 53 million and 30
billion more resources available for development. He applauded
their efforts to get gas north sooner rather than later. He
concluded by saying that even though this route is about 100
miles longer, it would deliver more bang for the buck and bring
energy to another 10 or 15,000 people in homes that are having a
tough time surviving.
4:26:07 PM
He also had Yukon Pacific Corporation's final environmental
impact statement (EIS) for the Richardson Highway with him, one
of about 12 permits they had received. The military bases were
important pieces and Ahtna had conducted about $20 million worth
of gas exploration in the Copper River Basin. This line would
provide an opportunity for an outlet for their gas finds.
CO-CHAIR PASKVAN thanked him and said that concluded invited
testimony. He asked Senator Thomas if he had any remarks.
4:27:47 PM
SENATOR JOE THOMAS, sponsor of SB 215, Alaska State Legislature,
Juneau, AK, said he didn't prepare comments, but wanted to say
that gas pipelines had been talked about for a long time and it
was hard to believe that one of them hadn't happened yet,
because it would provide so many benefits to the Interior. He
thanked them for taking public testimony today and he looked
forward to answering any questions now and into the future.
CO-CHAIR PASKVAN said the USGS announced a likely discoverable
19 tcf/gas in Cook Inlet and that created the potential for
serious consideration of this line along with not needing a gas
treatment facility. This line could also serve as a lateral for
a large diameter line because the gas can flow either way in the
pipeline.
[SB 215 was held in committee.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB145CS(RES)-DNR-DOG-03-29-12.pdf |
SRES 3/30/2012 3:30:00 PM |
SB 145 |
| SB145CS(RES)-DOR-TAX-03-29-12.pdf |
SRES 3/30/2012 3:30:00 PM |
SB 145 |