Legislature(2015 - 2016)BUTROVICH 205

03/25/2015 03:30 PM RESOURCES

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Audio Topic
03:33:13 PM Start
03:33:51 PM HB132
04:54:12 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 132 AGDC SUPPORT OF NATURAL GAS PROJECTS TELECONFERENCED
Heard & Held
-- Public Testimony --
*+ SB 68 ANTLERLESS MOOSE SEASONS; CLOSURES TELECONFERENCED
Scheduled but Not Heard
<Bill Hearing Postponed>
-- Testimony <Invitation Only> --
*+ SB 48 FORMER RESIDENT HUNTING LICENSE TELECONFERENCED
Scheduled but Not Heard
<Bill Hearing Postponed>
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                         March 25, 2015                                                                                         
                           3:33 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Cathy Giessel, Chair                                                                                                    
Senator Mia Costello, Vice Chair                                                                                                
Senator John Coghill                                                                                                            
Senator Peter Micciche                                                                                                          
Senator Bill Stoltze                                                                                                            
Senator Bill Wielechowski                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Bert Stedman                                                                                                            
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 132(L&C)                                                                                
"An  Act relating  to  the  purpose, powers,  and  duties of  the                                                               
Alaska  Gasline Development  Corporation  related  to the  Alaska                                                               
liquefied  natural  gas  project  and  an  in-state  natural  gas                                                               
pipeline;  relating to  the in-state  natural gas  pipeline fund;                                                               
and providing for an effective date."                                                                                           
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 68                                                                                                              
"An  Act relating  to resident  big  game tags;  relating to  the                                                               
authority of the Board of Game  and of advisory committees of the                                                               
Board  of Fisheries  and the  Board of  Game to  effect emergency                                                               
closures  during  established  seasons;  relating  to  antlerless                                                               
moose seasons; and providing for an effective date."                                                                            
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
SENATE BILL NO. 48                                                                                                              
"An Act  relating to a reduced  fee for a nonresident  hunting or                                                               
sport fishing  license and a  big game tag for  qualifying former                                                               
state  residents;   and  relating  to  the   requirements  for  a                                                               
nonresident hunting or sport fishing license."                                                                                  
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 132                                                                                                                  
SHORT TITLE: AGDC SUPPORT OF NATURAL GAS PROJECTS                                                                               
SPONSOR(s): REPRESENTATIVE(s) CHENAULT                                                                                          
                                                                                                                                
03/02/15       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/02/15       (H)       RES, L&C                                                                                               
03/06/15       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/06/15       (H)       Heard & Held                                                                                           
03/06/15       (H)       MINUTE(RES)                                                                                            
03/11/15       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/11/15       (H)       Heard & Held                                                                                           
03/11/15       (H)       MINUTE(RES)                                                                                            
03/11/15       (H)       RES AT 6:00 PM BARNES 124                                                                              
03/11/15       (H)       Heard & Held                                                                                           
03/11/15       (H)       MINUTE(RES)                                                                                            
03/13/15       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/13/15       (H)       Scheduled but Not Heard                                                                                
03/14/15       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/14/15       (H)       -- Continued from 3/13/15 Meeting --                                                                   
03/16/15       (H)       RES RPT CS(RES) NT 6DP 1DNP 2NR                                                                        
03/16/15       (H)       DP: JOHNSON, HERRON, HAWKER, OLSON,                                                                    
                        NAGEAK, TALERICO                                                                                        
03/16/15       (H)       DNP: JOSEPHSON                                                                                         
03/16/15       (H)       NR: TARR, SEATON                                                                                       
03/16/15       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/16/15       (H)       Heard & Held                                                                                           
03/16/15       (H)       MINUTE(L&C)                                                                                            
03/18/15       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/18/15       (H)       Moved  CSHB 132(L&C) Out of Committee                                                                  
03/18/15       (H)       MINUTE(L&C)                                                                                            
03/20/15       (H)       L&C RPT CS(L&C) NT 2DP 2DNP 3NR                                                                        
03/20/15       (H)       DP: TILTON, OLSON                                                                                      
03/20/15       (H)       DNP: JOSEPHSON, KITO                                                                                   
03/20/15       (H)       NR: LEDOUX, COLVER, HUGHES                                                                             
03/23/15       (H)       TRANSMITTED TO (S)                                                                                     
03/23/15       (H)       VERSION: CSHB 132(L&C)                                                                                 
03/25/15       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
REPRESENTATIVE CHENAULT                                                                                                         
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Prime sponsor of HB 132.                                                                                 
                                                                                                                                
RENA DELBRIDGE                                                                                                                  
Staff to Representative Hawker                                                                                                  
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Commented on HB 132.                                                                                     
                                                                                                                                
MERRICK PIERCE, representing himself                                                                                            
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Opposed HB 132.                                                                                        
                                                                                                                                
HAROLD HEINZE, representing himself                                                                                             
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Suggested amendments to HB 132.                                                                          
                                                                                                                                
BILL WARREN, representing himself                                                                                               
Nikiski, Alaska                                                                                                                 
POSITION STATEMENT:  Opposed HB 132.                                                                                          
                                                                                                                                
REED CHRISTENSEN, representing himself                                                                                          
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Supported HB 132.                                                                                        
                                                                                                                                
PAMELA THROOP, representing herself                                                                                             
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Opposed HB 132.                                                                                          
                                                                                                                                
DOUG SMITH                                                                                                                      
Alaska Support Industry Alliance                                                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Supported HB 132.                                                                                        
                                                                                                                                
GEORGE PIERCE, representing himself                                                                                             
Kasilof, Alaska                                                                                                                 
POSITION STATEMENT:  Opposed HB 132.                                                                                          
                                                                                                                                
JIM PLAQUET, representing himself                                                                                               
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Supported HB 132.                                                                                        
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:33:13 PM                                                                                                                    
CHAIR  CATHY   GIESSEL  called  the  Senate   Resources  Standing                                                             
Committee meeting  to order at 3:33  p.m. Present at the  call to                                                               
order  were Senators  Coghill, Micciche,  Stoltze, Costello,  and                                                               
Chair Giessel.                                                                                                                  
                                                                                                                                
          HB 132-AGDC SUPPORT OF NATURAL GAS PROJECTS                                                                       
                                                                                                                                
3:33:51 PM                                                                                                                    
CHAIR GIESSEL  announced HB 132  to be up for  consideration. She                                                               
invited Representative Chenault to the table.                                                                                   
                                                                                                                                
REPRESENTATIVE  CHENAULT,   Alaska  State   Legislature,  Juneau,                                                               
Alaska, prime  sponsor of HB  132, said  HB 132 affirms  a policy                                                               
direction for  the Alaska Gasline Development  Corporation (AGDC)                                                               
set by  the legislature in  2013 when  AGDC was created  and also                                                               
again in  2014 when the  legislature approved  AGDC's involvement                                                               
with  the   Alaska  Natural  Gas  pipeline   Project  (AKLNG)  in                                                               
conjunction with SB 138.                                                                                                        
                                                                                                                                
HB 132  recognizes that AGDC is  already engaged as a  partner on                                                               
behalf  of the  State in  the Alaska  LNG Project,  which is  the                                                               
project most likely to deliver the greatest benefit to Alaskans.                                                                
                                                                                                                                
3:35:12 PM                                                                                                                    
SENATOR WIELECHOWSKI joined the committee.                                                                                      
                                                                                                                                
REPRESENTATIVE CHENAULT continued that  because the AKLNG Project                                                               
is  most likely  to deliver  the greatest  benefits to  Alaskans,                                                               
House  Bill 132  ensures that  AGDC maintains  its commitment  to                                                               
this  project and  does not  embark on  a duplicative,  competing                                                               
project until  the future of  the AKLNG Project is  more certain.                                                               
Per House Bill  132, AGDC would be free to  pursue other projects                                                               
at  the earliest  of three  dates:  1) if  a party  to the  AKLNG                                                               
Project  withdraws, 2)  if the  AKLNG Project  proceeds into  the                                                               
Front-End Engineering  and Design (FEED)  phase, and 3)  if there                                                               
is no agreement by July 1, 2017.                                                                                                
                                                                                                                                
3:36:11 PM                                                                                                                    
The legislation further  recognizes that the state  is prudent to                                                               
maintain  its  back-up  plan,  the  ASAP  project,  in  case  its                                                               
partners  in  the  AKLNG  Project  fail to  commit  to  the  next                                                               
development  phase. Should  that  occur, AGDC  is  poised to  re-                                                               
solicit  gas buyers  and  gas  sellers and  to  upgrade the  ASAP                                                               
proposal as supported by the market.                                                                                            
                                                                                                                                
3:37:22 PM                                                                                                                    
REPRESENTATIVE CHENAULT said keys  to megaproject success include                                                               
the  elimination of  competing  objectives and  the alignment  of                                                               
stakeholders  along  a  single project.  With  the  unprecedented                                                               
momentum to date  of the aligned AKLNG  Project, contemplation of                                                               
competing projects  increases risk and uncertainty  that threaten                                                               
success. This  legislation ensures  that AGDC retains  the course                                                               
set by  the Legislature in  creating it and provides  a framework                                                               
for it to advance the state's  interests as a full participant in                                                               
the AKLNG Project.                                                                                                              
                                                                                                                                
3:37:27 PM                                                                                                                    
RENA  DELBRIDGE, staff  to  Representative  Hawker, Alaska  State                                                               
Legislature,  Juneau,  Alaska,  said  she  is  working  with  the                                                               
speaker on HB 132 and would explain the sections.                                                                               
                                                                                                                                
3:39:35 PM                                                                                                                    
Section 1 is conforming language.                                                                                               
                                                                                                                                
Section 2 adds a new  subsection to AS 31.25.005, AGDC's purpose,                                                               
to   place  temporary   restrictions  on   AGDC's  abilities   by                                                               
prohibiting AGDC  from developing a natural  gas pipeline project                                                               
in  which more  than half  the  gas transported  is intended  for                                                               
export   as  liquefied   natural   gas,   and  prohibits   AGDC's                                                               
involvement  in a  liquefied natural  gas  project that  competes                                                               
with the  AKLNG Project  in which  AGDC is  already contractually                                                               
involved.                                                                                                                       
                                                                                                                                
These prohibitions terminate at the  earliest of three dates: the                                                               
time  at which  the state  and other  AKLNG Project  parties that                                                               
have contractual  rights to gas  withdraw from the  AKLNG Project                                                               
or  when the  state  and  the other  AKLNG  parties progress  the                                                               
project into  the next  phase, Front  End Engineering  and Design                                                               
(FEED);  or  the  time  at  which  the  state  or  another  party                                                               
withdraws  from the  Alaska LNG  Project, or  as final  backstop,                                                               
July 1, 2017.                                                                                                                   
                                                                                                                                
Section 3  adds a new  subsection to AS 31.25.080,  AGDC's powers                                                               
and duties,  to require  AGDC to obtain  written consent  from an                                                               
entity controlling or  owning gas before it can  market that gas.                                                               
It  does  not  prohibit  AGDC  from  marketing.  The  legislature                                                               
created  statutory  authority  for  them to  create  a  marketing                                                               
subsidiary at some  point in the future if DNR  or other resource                                                               
controllers ask them to help market that gas.                                                                                   
                                                                                                                                
Section 4 amends AS 31.25.100,  the In-state Natural Gas Pipeline                                                               
Fund, to restrict  AGDC from using the monies for  a project that                                                               
competes with  the AKLNG  Project or for  a natural  gas pipeline                                                               
project through which  a majority of gas is  intended for export.                                                               
These  restrictions expire  at  the earliest  of  the same  three                                                               
dates.                                                                                                                          
                                                                                                                                
3:40:30 PM                                                                                                                    
Section  5 amends  AGDC's definitions  to  conform the  statutory                                                               
reference  in the  definition of  "Alaska  liquefied natural  gas                                                               
project"  to reflect  the addition  of the  new subsection  in AS                                                               
31.25.005.                                                                                                                      
                                                                                                                                
Section  6 adds  a new  term, "front-end  engineering and  design                                                               
study,"  to  AS  31.25.390,   AGDC  definitions.  The  definition                                                               
replicates the language in the  Heads of Agreement (HOA) document                                                               
for the  AKLNG Project,  dated Jan. 14,  2014, between  AGDC, the                                                               
State of Alaska, BP, Conoco, TransCanada, and Exxon Mobil.                                                                      
                                                                                                                                
Section 7 sets an immediate effective date.                                                                                     
                                                                                                                                
3:42:59 PM                                                                                                                    
CHAIR GIESSEL asked the intent of the legislation.                                                                              
                                                                                                                                
REPRESENTATIVE  CHENAULT replied  that  it is  to  make sure  the                                                               
legislature's issues are protected.   Roughly $180-200 million is                                                               
sitting  in  the fund.  Since  AGDC  was incorporated  they  were                                                               
prohibited  from doing  duplicate services  and that  is probably                                                               
the main reason.  Competition is seen as  bringing uncertainty to                                                               
a project that  he thinks will go forward and  he didn't want the                                                               
AGDC to get in  the way of that project. This  keeps some of that                                                               
from happening.                                                                                                                 
                                                                                                                                
3:46:28 PM                                                                                                                    
SENATOR WIELECHOWSKI said  he didn't support HB 4 or  SB 138, but                                                               
he   respects  the   democratic  process   and  appreciates   his                                                               
perspective, but  HB 132 creates  more market chaos. He  asked if                                                               
he could envision a compromise with the governor.                                                                               
                                                                                                                                
REPRESENTATIVE  CHENAULT  said  that  is exactly  what  they  are                                                               
looking for.  The last  thing he  wants to do  is fight  with the                                                               
governor.                                                                                                                       
                                                                                                                                
3:51:25 PM                                                                                                                    
SENATOR MICCICHE said  he views this bill as  asking the governor                                                               
to  step back  and  come to  the  table. He  wanted  to know  how                                                               
Representative  Chenault defines  competing with  ourselves. What                                                               
are the limits  of where AGDC and the ASAP  Project would compete                                                               
with AKLNG?                                                                                                                     
                                                                                                                                
MS. DELBRIDGE  answered without additional  clarity on  what ASAP                                                               
might become it's  difficult to be too precise.  But the governor                                                               
expressed a  desire to  have parallel  projects of  generally the                                                               
same size;  both would terminate  in an LNG facility.  They would                                                               
keep going at  the same time until they  reached final investment                                                               
decision (FID)  at which  point the one  that delivered  the most                                                               
benefits to  the state would  get the state's full  support. That                                                               
indicates a  sense of  competition. The  Army Corps  of Engineers                                                               
has   already  paused   its  work   on   the  ASAP   supplemental                                                               
Environmental Impact Statement (EIS), because  if it turns into a                                                               
bigger line it might become regulated by FERC.                                                                                  
                                                                                                                                
Additionally, there is a lot  of potential for market uncertainty                                                               
and all of the gas contracts need  to be in place before FID. So,                                                               
two different projects  presumably carrying the same  gas need to                                                               
go out to  secure market at the same time  would create confusion                                                               
but  also would  potentially  give the  markets  some ability  to                                                               
leverage the two projects against  each other potentially driving                                                               
down the price that the state ultimately receives for its gas.                                                                  
                                                                                                                                
MS.  DELBRIDGE explained  that there  is  also the  chance of  an                                                               
unfair advantage to  one project or the other if  anyone wants to                                                               
pick  that winner  and  try  to make  it  happen. In  particular,                                                               
special terms  are granted to  an ASAP  pipeline under HB  4 that                                                               
give  it  preferential and  priority  treatment  for permits  and                                                               
authorizations from the state.                                                                                                  
                                                                                                                                
3:56:45 PM                                                                                                                    
SENATOR MICCICHE  asked if  language on page  4, line  10, saying                                                               
"the corporation may  not expend money" is what  they are calling                                                               
competition.                                                                                                                    
                                                                                                                                
MS. DELBRIDGE  answered that  the sponsor  had to  somehow define                                                               
what a competing  pipeline might be and, respecting  the need for                                                               
the state to maintain a  viable backup instate option, the export                                                               
limit was the logical place to turn.                                                                                            
                                                                                                                                
3:57:54 PM                                                                                                                    
SENATOR COSTELLO  said many Alaskans  see this as  a disagreement                                                               
and  asked  Representative  Chenault   to  talk  about  why  this                                                               
legislation is necessary.                                                                                                       
                                                                                                                                
REPRESENTATIVE CHENAULT  answered that it's about  supporting the                                                               
pipeline  project  that is  most  likely  to succeed,  the  AKLNG                                                               
Project. If  it doesn't go forward,  why it failed would  have to                                                               
be determined  along with why  three of the biggest  producers in                                                               
the world  and the State  of Alaska  with all of  their interests                                                               
aligned could  not put a  project together before  moving forward                                                               
on any type of new project.  There has to be an export component,                                                               
because the amount of gas that  Alaskans use is fairly trivial in                                                               
the big picture.                                                                                                                
                                                                                                                                
4:02:59 PM                                                                                                                    
SENATOR MICCICHE  commented that the project  had purchased about                                                               
540 acres  in Nikiski. The place  is abuzz all the  time. This is                                                               
the real thing and he is excited about it.                                                                                      
                                                                                                                                
REPRESENTATIVE  CHENAULT confirmed  that they  had purchased  540                                                               
acres  and are  looking  for  as total  of  800  acres, but  that                                                               
doesn't  necessarily  mean  they  are  bringing  the  project  to                                                               
Nikiski.  The amount  of the  money they  have spent  there is  a                                                               
small piece of an overall $65 billion project.                                                                                  
                                                                                                                                
CHAIR GIESSEL asked  how Alaska's project ranks  with others that                                                               
have shut down around the world.                                                                                                
                                                                                                                                
REPRESENTATIVE CHENAULT  answered that  he didn't have  a ranking                                                               
system and  that there are  about 17 or  18 projects up  and down                                                               
the  West  Coast,  mostly  in  B.C.  Alaska's  is  a  little  bit                                                               
different. It has the people  with the gas making the investment.                                                               
Buyers are buying into those  other projects, not producers. Only                                                               
one of our producers is involved in any of those projects.                                                                      
                                                                                                                                
Alaska  has the  producers of  the  gas in  partnership with  the                                                               
State of Alaska, which is the  alignment needed to move a project                                                               
forward. AGIA was  tried and it kept the  producers out. Although                                                               
the market changed,  the suppliers of gas need to  be involved in                                                               
any  project  of this  magnitude  or  you're just  spinning  your                                                               
wheels.                                                                                                                         
                                                                                                                                
4:07:49 PM                                                                                                                    
SENATOR COGHILL thanked him for  his tenacity, but cautioned when                                                               
speaking about "the project" that  people don't know which one he                                                               
is referring  to. He  asked what  it will take  to get  the AKLNG                                                               
Project to  the FID  point and why  hold this ASAP  up to  see if                                                               
they can get there.                                                                                                             
                                                                                                                                
MS.  DELBRIDGE responded  that  there is  a  concern that  export                                                               
grade gas  and a higher pressure  in the pipe would  cost more to                                                               
take off  at different points  along the  line. That is  a factor                                                               
that everyone  is waiting for  more detail  on if a  new approach                                                               
becomes an LNG export line.                                                                                                     
                                                                                                                                
The  AKLNG Project's  front end  engineering and  designed (FEED)                                                               
decision  is  expected   in  2nd  quarter  2016.   This  is  when                                                               
essentially the  project parties  look at the  huge body  of work                                                               
and preliminary engineering done during  the pre-FEED in the past                                                               
two  years  and  work  out some  commercial  and  governing  type                                                               
agreements and  look at internal  marketing efforts to  decide if                                                               
the project  was shaping up  in such  a manner that  it warranted                                                               
them moving forward into that next stage gate.                                                                                  
                                                                                                                                
She said that  enalytica, the consulting firm hired  by LB&A, has                                                               
an excellent  overview of the  various components that  the AKLNG                                                               
parties will need to have before  them in order to make that FEED                                                               
decision. Then it will be  another couple of years of fine-tuning                                                               
the engineering and studying and  making sure that permits are in                                                               
place. The EPA's EIS process has  been initiated and that is when                                                               
FERC will  do the bulk  of the permitting analysis  and hopefully                                                               
deliver a permit.                                                                                                               
                                                                                                                                
4:14:43 PM                                                                                                                    
That phase  will take  several years and  require a  $2.5 billion                                                               
amongst the parties.  Some long lead time  items for construction                                                               
might also  be ordered. FEED  culminates in the  final investment                                                               
decision (FID),  the final  stage gate  where everyone  can check                                                               
off that  things have gone  as they needed to  in order to  go to                                                               
construction.                                                                                                                   
                                                                                                                                
4:15:17 PM                                                                                                                    
SENATOR  COGHILL asked  if this  bill holds  the ASAP  Project at                                                               
bay.                                                                                                                            
                                                                                                                                
MS. DELBRIDGE answered yes.                                                                                                     
                                                                                                                                
SENATOR  STOLTZE   asked  to  what   degree  the   producers  had                                                               
participated in the hearing process.                                                                                            
                                                                                                                                
MS. DELBRIDGE answered  that the other parties to  AKLNG have not                                                               
participated in the legislative process on HB 132.                                                                              
                                                                                                                                
SENATOR STOLTZE asked the name of those parties.                                                                                
                                                                                                                                
MS. DELBRIDGE  replied ExxonMobil, ConocoPhillips BP,  as well as                                                               
the State of  Alaska through the Department  of Natural Resources                                                               
(DNR), AGDC, and  TransCanada. ExxonMobil owns a  majority of the                                                               
project at 33  percent; the state is the second  highest owner at                                                               
25 percent,  ConocoPhillips has  around 22 percent  and BP  as 21                                                               
percent.                                                                                                                        
                                                                                                                                
4:17:47 PM                                                                                                                    
SENATOR WIELECHOWSKI  said he  hoped to  hear from  the partners,                                                               
the  DNR  and   the  governor's  office.  Section   3  gives  him                                                               
heartburn, because  it says  the corporation  may not  market gas                                                               
owned  or controlled  by  any entity  other  than itself  without                                                               
express written consent from that  entity. He didn't see a sunset                                                               
date and he worried that if  AGDC ultimately builds the line that                                                               
language will give veto power to  the producers who don't own the                                                               
gas but control it.                                                                                                             
                                                                                                                                
MS. DELBRIDGE explained  that the entity that has the  gas is the                                                               
entity that  is going to  need to market  it; AGDC, as  ASAP, was                                                               
always conceived  as a transportation  mechanism. AGDC  under the                                                               
ASAP framework never  took possession of the gas;  it simply took                                                               
temporary custody  to move  it from  one place  to the  next. The                                                               
same  type  of principle  applies:  if  somebody owns  something,                                                               
somebody else  can't market  it to  sell it at  a price  that the                                                               
person that  doesn't own it hasn't  asked that person to  go sell                                                               
it.  Title is  generally  required to  sell  something. So,  AGDC                                                               
under the old  framework, whether in AKLNG or in  ASAP, has never                                                               
had title to  gas. If DNR, who does carry  the state's gas share,                                                               
wants  AGDC's  assistance or  for  them  to  set up  a  marketing                                                               
subsidiary to make  the deals and look for  the potential buyers,                                                               
they can still do that.                                                                                                         
                                                                                                                                
SENATOR WIELECHOWSKI said  the duty to produce and  market gas is                                                               
the legal obligation a lessee has  and asked if this is saying if                                                               
one of  the majors decides they  didn't like the project  that he                                                               
could kill the gas line.                                                                                                        
                                                                                                                                
MS. DELBRIDGE replied  that duty to produce is  not necessarily a                                                               
duty to  market and that  legal counsel should follow  through on                                                               
the question.                                                                                                                   
                                                                                                                                
4:22:29 PM                                                                                                                    
CHAIR GIESSEL thanked her and opened public testimony.                                                                          
                                                                                                                                
4:22:39 PM                                                                                                                    
MERRICK PIERCE, representing himself,  Fairbanks, Alaska, said he                                                               
serves  on the  board of  the Alaska  Gasline Port  Authority and                                                               
that  Governor  Walker  has consistently  explained  the  correct                                                               
approach  for getting  a gasline  built. He  has already  said it                                                               
needs to be  a large diameter, economy-of-scale  pipeline for LNG                                                               
export. With  HB 132, a  few legislators  are having a  hard time                                                               
accepting that Alaskans picked a  new governor, one who knows how                                                               
to get a  gasline built. If HB  132 is passed, the  state has two                                                               
options. They  can either do  a project  that is not  economic or                                                               
one that  is controlled by  those who have projects  that compete                                                               
with Alaska.                                                                                                                    
                                                                                                                                
The question  is who should we  trust? The Governor or  those who                                                               
have consistently gotten  it wrong? He recounted  the many failed                                                               
attempts to get a gasline that made no economic sense.                                                                          
                                                                                                                                
Further, Mr. Pierce said, the HOA  does not require any player to                                                               
build  anything.  AKLNG  only  gets   a  project  if  the  global                                                               
corporations who  have competing  projects decide to  go forward.                                                               
He  cautioned that  the AKLNG  partners  have defrauded  Alaskans                                                               
with fraudulent  tariffs on  TAPS designed  to limit  North Slope                                                               
competition  and defraud  the  state of  billions  of dollars  in                                                               
revenue.                                                                                                                        
                                                                                                                                
In 2011  and 2012  when the  markets came  to Alaska  looking for                                                               
enough gas  to build  the gasline,  ExxonMobil's response  was to                                                               
ignore  it.  If they  wanted  a  project  they never  would  have                                                               
ignored that significant development.                                                                                           
                                                                                                                                
4:26:02 PM                                                                                                                    
HAROLD   HEINZE,   representing   himself,   Anchorage,   Alaska,                                                               
suggested  amendments  to  HB  132.   He  said  he  has  pipeline                                                               
experience spanning a  half century; he followed  the rebirth and                                                               
development of the  AKLNG Project over the last few  years. In SB
138 the 28th Legislature firmly  committed to the state's partner                                                               
participation in  the producer  sponsored pre-FEED  evaluation of                                                               
the  AKLNG  Project.  Work is  continuing  under  the  associated                                                               
agreements in preparation for a  special legislative session this                                                               
fall. He hoped that the legislature  will fulfill its role as the                                                               
Board  of Directors  for  the state  participation  in the  AKLNG                                                               
Project.  Given the  magnitude of  the decision,  each member  is                                                               
acting as  a fiduciary and responsible  to assure that he  or she                                                               
has  exercised  a  high  level of  due  diligence.  He  observed,                                                               
however,  that  while  much information  has  been  gathered  and                                                               
generated, the  legislature still  lacks major  information under                                                               
several categories of importance to a fiduciary.                                                                                
                                                                                                                                
He  said the  current instructions  in  HB 132  appear to  narrow                                                               
considerations that  will be brought  forward to  the legislature                                                               
and the public,  but it could be expanded to  a vehicle signaling                                                               
the   need  for   fuller  evaluation   of  rewards,   alternative                                                               
approaches  and benefits  in alternative  projects and  make them                                                               
publicly available before the decision rather than after.                                                                       
                                                                                                                                
4:29:21 PM                                                                                                                    
BILL WARREN,  representing himself,  Nikiski, Alaska,  opposed HB
132.  It is  unnecessary and  a slap  to the  governor. The  feud                                                               
going on between the House and  the Governor ought to cease. This                                                               
is a needless  fight. Strategically it's bad,  because it signals                                                               
that Alaska will make major concessions to secure AKLNG.                                                                        
                                                                                                                                
He said HB 132  will muzzle the ASAP Project when  to really be a                                                               
Plan B it should be up  and running at curbside. AGDC should have                                                               
the full  configuration of pipe  sizes and capacities  they want,                                                               
some data  on their  gas handling  and on  the LNG  component. He                                                               
said everyone  has high  hopes that AKLNG  will succeed,  but Las                                                               
Vegas odds give it 50 percent.                                                                                                  
                                                                                                                                
4:32:16 PM                                                                                                                    
REED  CHRISTENSEN,   representing  himself,   Anchorage,  Alaska,                                                               
supported HB 132.  He said that as part of  his job he interfaces                                                               
with oil  and gas industry  people on  a regular basis  and keeps                                                               
hearing  the same  thing about  the potential  gas line  from the                                                               
North Slope: that  Alaska is closer that it has  ever been. A key                                                               
component  of the  AKLNG Project's  success  has to  do with  the                                                               
alignment of all the parties.  Setting up another project at this                                                               
time doesn't make sense.                                                                                                        
                                                                                                                                
4:35:27 PM                                                                                                                    
PAMELA THROOP,  representing herself, Fairbanks,  Alaska, opposed                                                               
HB 132. Don't  tie the governor's hands, she said,  and make sure                                                               
Alaska gets the  plan that is best for the  state. Chenier Energy                                                               
in Texas  got permission to sell  gas to China. Since  then, they                                                               
have built four  trains and have sold all the  gas they can find.                                                               
If a small company  who doesn't own any gas can  sell it all over                                                               
the world, Alaska can, too.                                                                                                     
                                                                                                                                
4:38:28 PM                                                                                                                    
DOUG SMITH, Alaska Support  Industry Alliance, Anchorage, Alaska,                                                               
supported HB 132.  He can speak for service  companies: they have                                                               
been  planning  for  investing   and  making  adjustments  to  be                                                               
meaningful participants  in AKLNG.  Right now they  are concerned                                                               
the  project  is   being  killed.  The  producer's   have  to  be                                                               
concerned, too. Give it time to  work and if it doesn't, there is                                                               
a  backup  plan.  At  .5   bcf/day  throughput,  the  ASAP  seems                                                               
reasonable,  but now  they are  talking about  something that  is                                                               
four  times   that  size  and   clearly  stirs  the   concern  of                                                               
competition.                                                                                                                    
                                                                                                                                
4:40:31 PM                                                                                                                    
GEORGE PIERCE, representing himself,  Kasilof, Alaska, opposed HB
132. It ties Alaskans' hands.  The same legislators have proposed                                                               
pipelines for  10 years with  no results. The governor  is making                                                               
sure Alaska  gets a pipeline  built. The Japanese said  they have                                                               
been ready to  buy Alaskan gas for over 40  years and they prefer                                                               
a large diameter line to Valdez.                                                                                                
                                                                                                                                
4:43:15 PM                                                                                                                    
JIM PLAQUET,  representing himself, Fairbanks,  Alaska, supported                                                               
HB 132. He  said he worked on  the TAPS when he was  18 years old                                                               
and remembered workers  telling him then - 41 years  ago - that a                                                               
gasline would be built next.  The governor's backup plan seems to                                                               
be in  competition with  the AKLNG  Project that  provides Alaska                                                               
with the best chance of having a viable project.                                                                                
                                                                                                                                
CHAIR  GIESSEL   finding  no  further  comments,   closed  public                                                               
testimony on HB 132.                                                                                                            
                                                                                                                                
4:46:02 PM                                                                                                                    
REPRESENTATIVE  CHENAULT  commented  that he  and  Representative                                                               
Hawker created AGDC and he would  be remiss if he didn't have all                                                               
the faith in  the world that Dan Fauske, the  head of AGDC, could                                                               
put a  project together. That is  what it was tasked  with in the                                                               
beginning. He still has faith in him and his team.                                                                              
                                                                                                                                
CHAIR GIESSEL added  that AS 31.25.005 states  the Alaska Gasline                                                               
Development Corporation (AGDC) shall:                                                                                           
                                                                                                                                
     For  the benefit  of the  state to  the fullest  extent                                                                    
     possible:  1) develop  and have  primary responsibility                                                                    
     for  developing   natural  gas  pipelines,   an  Alaska                                                                    
     liquefied natural gas  project and other transportation                                                                    
     mechanisms  to deliver  natural  gas  in-state for  the                                                                    
     maximum benefit of the people of Alaska.                                                                                   
                                                                                                                                
She said  that a  couple of people  mentioned the  Alaska Gasline                                                               
Port Authority,  the group that  Governor Walker was part  of and                                                               
working with,  and asked if  he thought the governor  is changing                                                               
the plan to export from Valdez.                                                                                                 
                                                                                                                                
REPRESENTATIVE CHENAULT replied that he had no idea.                                                                            
                                                                                                                                
4:50:23 PM                                                                                                                    
SENATOR  MICCICHE  stated  that  the  governor's  intentions  are                                                               
honorable. On two separate occasions  in his district he promised                                                               
folks  of the  Kenai  that his  drive was  for  a large  diameter                                                               
pipeline  with its  terminus in  Nikiski, and  he expects  him to                                                               
keep that promise. The governor  is just looking at creative ways                                                               
to get there.                                                                                                                   
                                                                                                                                
SENATOR MICCICHE  said he  thought it was  important to  give the                                                               
governor the opportunity to step  back and work together with the                                                               
two bodies toward something that  works with AKLNG as the primary                                                               
project and a second project clearly secondary.                                                                                 
                                                                                                                                
SENATOR COSTELLO asked Representative Chenault when AGDC was put                                                                
together what he envisioned the governor's role would be.                                                                       
                                                                                                                                
REPRESENTATIVE  CHENAULT   replied  that  the  governor   is  the                                                               
administrator  for  the State  of  Alaska  and  is in  charge  of                                                               
working  with  the legislature  to  make  sure Alaskans  get  the                                                               
greatest benefit from the natural resources they have.                                                                          
                                                                                                                                
CHAIR GIESSEL held HB 132 in committee.                                                                                         
                                                                                                                                
4:54:12 PM                                                                                                                    
CHAIR GIESSEL adjourned the Senate Resources Committee meeting                                                                  
at 4:54 p.m.                                                                                                                    
                                                                                                                                

Document Name Date/Time Subjects
HB132 ver G.pdf SRES 3/25/2015 3:30:00 PM
HB 132
HB132 Sponsor Statement.pdf SRES 3/25/2015 3:30:00 PM
HB 132
HB132 Sectional Analysis.pdf SRES 3/25/2015 3:30:00 PM
HB 132
HB132 Fiscal Note-DCCED-AGDC-03-05-15.pdf SRES 3/25/2015 3:30:00 PM
HB 132
HB132 Backup - Letter from Gov to House 3-2-15.PDF SRES 3/25/2015 3:30:00 PM
HB 132
HB132 Summary of Changes ver A to ver G.pdf SRES 3/25/2015 3:30:00 PM
HB 132
HB132 Support and Opposition.pdf SRES 3/25/2015 3:30:00 PM
HB 132
HB132 Backup - Letter from House to Gov 2-20-15.pdf SRES 3/25/2015 3:30:00 PM
HB 132
CSHB132(L&C) AGDC Fiscal Note.pdf SRES 3/25/2015 3:30:00 PM
HB 132
HB132 Backup-Oped Heinze.pdf SRES 3/25/2015 3:30:00 PM
HB 132
HB 132 Testimony Harold Heinze.pdf SRES 3/25/2015 3:30:00 PM
HB 132