Legislature(2011 - 2012)BUTROVICH 205
04/02/2012 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB215 | |
| SB145 | |
| 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 219 | TELECONFERENCED | |
| += | SB 215 | TELECONFERENCED | |
SB 215-GASLINE DEV. CORP: IN-STATE GAS PIPELINE
3:36:13 PM
CO-CHAIR PASKVAN announced consideration of SB 215 and opened
public testimony.
3:37:08 PM
BILL WARREN, representing his daughter who lived in Fairbanks,
Kenai, AK, supported SB 215. He said Alaska is in an energy
crisis while ExxonMobil is making a killing in Qatar. He said
our number-one priority should be getting a 36 inch, 2.5 bcf gas
line from the North Slope to Fairbanks and then have an open
season and see what happens. They also need to run a 24 inch
pipeline from Cook Inlet to Palmer and Glennallen to Fairbanks
to catch all the military bases. "Then if miracles happen and we
get a big line and it comes down to Valdez, they loop the 24
inch into the 36 inch and away we go."
3:42:15 PM
MERRICK PEIRCE, Board Member, Alaska Gasline Port Authority
(AGPA), North Pole, AK, said he was speaking on his own behalf
in support of SB 215. He said the high cost of energy in the
Interior was crippling the economy. He was "delighted" the
sponsors of SB 215 recognized what the USGS scientists, the
Department of Energy and those in industry were telling them:
that Cook Inlet has as much as 24 tcf/gas, a 200 year supply for
Alaskans. He offered four suggestions for their consideration as
they develop this pipeline idea: look for redundancy,
integration, greatest population served and a minimal return on
equity.
MR. PEIRCE said in considering a small diameter pipeline from
Cook Inlet to Fairbanks it is important to route it through the
correct corridor and the best one is from Palmer to Glennallen
and Glennallen to Fairbanks. While it is longer by almost 100
miles, it serves a larger population with significant potential
industrial usage for mining. A longer line does not necessarily
mean more expensive gas. If the longer route serves a
substantially larger population the cost of gas could even be
less due to improved economies of scale.
The military bases need affordable gas, too, and reducing their
costs is very important Mr. Peirce said. For example, national
missile defense at Fort Greely runs their power plant on
expensive diesel fuel.
MR. PEIRCE said because earthquakes, fires, floods and tsunamis
all happen here, people need to think about how to build
redundancy with the gas grid for the same reasons as the power
grid. Being able to pull gas from Cook Inlet, the Copper River
Basin or the North Slope through an interconnected grid brings
that redundancy. The Cook Inlet gasline can be integrated into
the planning for the large diameter gasline, as well; the number
of wet gas take off points can be reduced from the large line if
the same populations are served through a gas-fed parallel spur
line. This would significantly reduce the Capex for the large
line gas take off points and if the infrastructure is provided
to allow gas to move to Valdez from the spur line to Glennallen,
this allows Cook Inlet drillers access to a deep water ice free
port where people expect to have an economical LNG export
facility.
He said that ANGDA had already created a gasline corridor for a
spur line to Glennallen and a final EIS was completed for the
Yukon Pacific version of the all-Alaska gasline adjacent to the
TAPS corridor, thus demonstrating that such a route is permit-
able reducing permitting risk.
Finally, he said to consider the benefits of little or no return
on equity saying the state does not ask for return on equity
with most public infrastructure like highways, airports and
ports. They provide great public benefit. The same logic should
apply to a gasline that serves Alaskans.
3:45:21 PM
A good example of what they must not do is seen with HB 9 where
the sponsors contemplated double digit return on about $3
billion in equity. With a 14 percent return, it would cost $420
million per year (built into the tariff) to support that equity
return. With an out of state owner, the $420 million would be
transferred per year out of the Alaskan economy. To provide a
sense of scale, this amount of money represents about half of
what is paid in annual Permanent Fund Dividends each year, and
they have a positive impact on Alaskan economy.
3:46:09 PM
JOMO STEWART, Fairbanks Economic Development Corporation (FEDC),
Fairbanks, AK, supported SB 215. It would help address
Fairbanks' energy cost issue as well as their PM2.5 issue. That
support is qualified because they believe this is one portion of
a multi-phased multi stage project that brings volume gas at an
affordable price to not only to Fairbanks and the Interior, but
hopefully kick starts broader energy distribution to the rest of
the state.
3:48:20 PM
CO-CHAIR PASKVAN, finding no further comments, closed public
testimony and invited the bill sponsor forward.
SENATOR MCGUIRE said she supported the concept in SB 215 and
that there are no bad ideas when it comes to considering how to
get energy to Fairbanks. Her only question was whether they
should consider removing the word "construct" on lines 1 and 9
on page 2, because maybe they want to be cautious about how far
they "push these guys" in AGDC with regard to the larger in-
state line. She was worried that language said they have to
construct it and maybe they should say they want them to study
it and come back with a proposal.
3:50:06 PM
SENATOR THOMAS, Alaska State Legislature, Juneau, AK, sponsor of
SB 215, said the word "construct" was used to avoid the word
"study," because they are studying that proposal right now. The
AGIA proposal might be a little bit more in play and this is
intended to make sure they are keeping on track. He didn't want
people to think they are starting over with a new study.
SENATOR MCGUIRE said she wanted to get that on the record and
she agreed.
SENATOR THOMAS said he appreciated the committee hearing the
bill and had no additional comments.
SENATOR FRENCH thanked him for this bill and noted that three
Anchorage Senators had signed onto this bill primarily because
it gets gas to Fairbanks as fast as possible.
CO-CHAIR WAGONER said he was going to vote to pass SB 215 from
the committee, but it's a question about knowing exactly how
much reserves Cook Inlet has to develop and send to Fairbanks.
This is a little premature, but he also saw the pain on peoples'
face in Fairbanks.
SENATOR THOMAS said everyone realizes that the resource has to
be proved up before moving forward.
3:53:52 PM
SENATOR WIELECHOWSKI said they think there is enough gas in Cook
Inlet to power the state for 200 years, and it's a lot cheaper
than bringing gas down from the North Slope, because you don't
need a conditioning plant or to go over tough terrain and the
Brooks Range. It also has a railroad for transporting goods.
But this is also good for Anchorage and Southcentral, Senator
Wielechowski said, because it will spur more exploration. Over
the years they have heard that the problem with Cook Inlet is if
you find gas there you have nowhere to sell it. If the line is
built to Fairbanks, they now have a market to Fairbanks, but it
also connects to the big line that is showing some promise of
being built. On the other hand, if it does turn out that Cook
Inlet has problems, and they do get a big line, they would have
a spur line into Anchorage and Southcentral. This is a win/win
for Southcentral, the Interior and for Fairbanks as well as for
more exploration in Cook Inlet.
CO-CHAIR PASKVAN echoed the sentiments and added that as a
matter of state policy, having a singular energy system from the
Kenai through Southcentral to Interior Alaska makes a lot of
sense.
3:56:04 PM
CO-CHAIR WAGONER moved to report SB 215, version \M, from
committee with individual recommendations and forthcoming fiscal
note. There were no objections and it SB 215 moved from the
Senate Resources Standing Committee.
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