Legislature(2013 - 2014)BARNES 124
03/12/2013 11:15 AM House ECON. DEV., TRADE & TOURISM
| Audio | Topic |
|---|---|
| Start | |
| Overviews(s): Alaska Water Manufacturing and Export | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, INTERNATIONAL
TRADE AND TOURISM
March 12, 2013
11:20 a.m.
MEMBERS PRESENT
Representative Shelley Hughes, Chair
Representative Bob Herron
Representative Pete Higgins
Representative Kurt Olson
Representative Lance Pruitt
Representative Harriet Drummond (via teleconference)
Representative Geran Tarr
MEMBERS ABSENT
Representative Lynn Gattis
Representative Craig Johnson
COMMITTEE CALENDAR
OVERVIEWS(S): ALASKA WATER MANUFACTURING AND EXPORT
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
GINGER BLAISDELL, Staff
Representative Shelley Hughes
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented two short videos on the water
export industry in Alaska on behalf of Representative Hughes.
GREG WOLF, Executive Director
World Trade Center Alaska (WTCAK)
Anchorage, Alaska
POSITION STATEMENT: Provided background information and
answered questions during the discussion on Alaska water
manufacturing and export.
TERRY TRAPP, Chief Executive Officer
True Alaska Bottling (TAB)
Sitka, Alaska
POSITION STATEMENT: Participated in the discussion of Alaska
water manufacturing and export.
LYNN ALLINGHAM, Chief Executive Officer
Alaska Brands Group LLC. (ABG)
Anchorage, Alaska
POSITION STATEMENT: Participated in the discussion of Alaska
water manufacturing and export.
MICHAEL WALTON, Natural Resource Manager
Water Resources Section
Division of Mining, Land and Water
Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the discussion of
Alaska water manufacturing and export.
ACTION NARRATIVE
11:20:05 AM
CHAIR SHELLEY HUGHES called the House Special Committee on
Economic Development, International Trade and Tourism meeting to
order at 11:20 a.m. Representatives Drummond (via
teleconference), Tarr, Higgins, Pruitt, and Hughes were present
at the call to order. Representatives Herron and Olson arrived
as the meeting was in progress.
^OVERVIEWS(S): ALASKA WATER MANUFACTURING AND EXPORT
OVERVIEWS(S): ALASKA WATER MANUFACTURING AND EXPORT
11:20:52 AM
CHAIR HUGHES announced that the only order of business would be
overviews on the manufacturing and export of water from Alaska.
11:21:02 AM
GINGER BLAISDELL, staff to Representative Shelley Hughes, Alaska
State Legislature, informed the committee Chair Hughes began
looking at water as an export and an industry for Alaska after a
presentation from World Trade Center Alaska on undeveloped
industries. Water as an export, both as bulk and bottled water,
is an industry that has had some success in Alaska. Ms.
Blaisdell said there has been media interest in proposed water
exports from Sitka. She provided two short videos, one of which
was a short excerpt from an interview with Mr. Garry White,
Executive Director, Sitka Economic Development Association,
Sitka, Alaska.
11:22:48 AM
A video was presented from 11:22 a.m. to 11:24 a.m.
11:24:55 AM
A video was presented from 11:24 a.m. to 11:28 a.m.
11:29:09 AM
MS. BLAISDELL described a 30-inch diameter pipe which runs from
Blue Lake to tidewater in Sitka. This infrastructure was built
with a state grant and is ready for future development.
CHAIR HUGHES asked for the cost and age of the pipe.
MS. BLAISDELL was unsure.
11:29:59 AM
GREG WOLF, Executive Director, World Trade Center Alaska
(WTCAK), stated that water is blue gold for Alaska because
unlike some other natural resources, water is abundant and
renewable. Alaska's small population and small agricultural
industry means there is a great supply of water for
commercialization. Mr. Wolf recalled that Alaska companies
interested in exporting water have been working since the early
1990s, at that time proposing to export bottled water to Japan.
He clarified that WTCAK considers all exports to be to foreign
countries, however, there are possible markets in the Lower 48.
An obstacle to water exports is the economy of scale needed to
produce a cost per unit that is competitive in the market. This
is due in part to the small customer base in Alaska. Also,
transportation costs to ship overseas or to the Lower 48 are
challenging. On the other hand, the interested parties today
are larger, better capitalized, and designed for exporting their
products. He opined the opportunities are large although there
is a lot of competition and there are other business challenges.
11:36:08 AM
CHAIR HUGHES asked for examples of successful water exporters.
MR. WOLF observed bottled water from other countries is
available indicating that bottled water operators from around
the world have found success. In further response to Chair
Hughes, he observed that bottled water comes from many locales,
and offered to further research his response.
11:38:27 AM
TERRY TRAPP, Chief Executive Officer, True Alaska Bottling
(TAB), stated his company has been working in Sitka for 10 years
and in 2006 acquired a bulk water license from the City and
Borough of Sitka for the export of freshwater. The company has
been working on developing bulk water for export since then,
however, initial interest in contracts for bulk water was low
because of the cost of transportation, but now interest is
growing due to drought and a diminishing supply of freshwater
around the world. With potential customers in the Middle East,
Mexico, and China, he said the costs are now justified, although
the costs of developing the bulk water industry remain daunting.
For example, a loading station capable of accommodating vessels
1,000 feet in length is needed in Sitka, and the large vessels
needed to make shipping economic are not available. Mr. Trapp
said TAB is looking to partner with a shipping line to acquire
an appropriate vessel. In addition to the loading station in
Sitka, receiving infrastructure with food-grade piping, storage
facilities, and bottling plants must be developed. A voyage
from Sitka to the Middle East takes twenty-eight to thirty days
thus one vessel would only make six voyages per year. His
company has made many investments to seek funding and meet the
economic challenges, and is very committed to the bulk water
business. Mr. Trapp pointed out that his company is forging a
new industry and a lot of capital is needed to make this
opportunity a reality.
11:44:42 AM
CHAIR HUGHES asked how much a large vessel would cost.
MR. TRAPP advised a vessel 900 feet to 1,000 feet in length and
125 feet wide that could carry approximately 35 million to 38
million gallons would cost from $60 million to $70 million.
CHAIR HUGHES then asked about the necessary permitting process
to allow TAB access to the water.
MR. TRAPP said TAB has not applied for the permits that will be
required, but has renewed its contract with the City and Borough
of Sitka and is in the process of lining up funding and
customers, although attracting customers is not difficult. The
infrastructure is a difficulty in that existing facilities that
have been used for oil cannot be used for potable water. His
company is close to submitting plans to the city and will then
proceed with permitting. Mr. Trapp restated that one of the key
factors is developing a transportation system that is economic
when compared to the cost of desalinization. In further
response to Chair Hughes, he said closer markets would be
northern China and Mexico.
11:51:05 AM
CHAIR HUGHES asked whether the Middle East is the most
interested.
MR. TRAPP explained that China has severely contaminated ground
water but areas of the Middle East are devoid of water. In
further response to Chair Hughes, he estimated shipping of bulk
water would begin within the next two years.
11:52:16 AM
LYNN ALLINGHAM, Chief Executive Officer, Alaska Brands Group
LLC. (ABG), informed the committee ABG is a locally-owned and
operated company that bottles water from Eklutna Lake in small
pack polyethylene terephthalate fiber (PET) plastic bottles.
The company has sales throughout Alaska and exports to Korea,
Japan, Taiwan, and soon to China. Water from Eklutna Lake is
unique it in that is alkaline and better for health. She said
value is added to the water by filtering, disinfecting, and
packaging in Alaska, and the company is providing good
manufacturing jobs. Challenges to ABG's success were raising
capital, regulations, and permitting. Ms. Allingham urged for
more incentives to attract small business investment. The
greatest barrier to the company's success is high freight costs.
Ms. Allingham concluded that ABG is utilizing an abundant,
renewable, natural resource to produce a value-added product.
11:54:26 AM
CHAIR HUGHES asked whether there were problems in the permitting
and regulation processes.
MS. ALLINGHAM relayed the construction permitting process in
Anchorage is very convoluted and burdensome due to the
interpretation of the state building code. In addition, the
permitting process for becoming a water bottler is obtuse and
antiquated; in fact, the agency confused U.S. Environmental
Protection Agency (EPA) and U.S. Food and Drug Administration
(FDA) regulations. In further response to Chair Hughes, she
said the agency referred to was the Department of Environmental
Conservation.
REPRESENTATIVE HERRON asked if there is a model state for Alaska
to follow.
11:56:45 AM
MS. ALLINGHAM advised that California, Texas, and New York have
bottled water regulations that are separate from water treatment
regulations; however, not all are an improvement. She suggested
that the International Bottled Water Association is a good
resource for the industry.
CHAIR HUGHES offered the committee's assistance.
MS. ALLINGHAM restated the importance of economic incentives for
investment, such as tax credits.
11:59:00 AM
MR. WOLF said Alaska Glacier Products LLC. (AGP) is another
bottled water company that has a different approach to marketing
than ABG. Its approach is as a co-packer, providing the
bottling capacity for another company - such as a grocery store
chain - to market its private brand or label.
CHAIR HUGHES asked the Department of Natural Resources (DNR) to
explain the permit process for a business to bottle and export
water.
12:02:10 PM
MICHAEL WALTON, Natural Resource Manager, Water Resources
Section, Division of Mining, Land and Water, Department of
Natural Resources, said his section issues water rights under
the Alaska Water Use Act. Alaska has addressed exporting water
from the state in AS 46.15.035, the statute that relates to
exporting water from one of the six hydrologic units in the
state. The statute has four main components. The commissioner
of DNR must find the water to be exported is surplus to the
needs of that unit, there must be satisfaction of AS 46.15.080,
and there is a public interest element. If the water is
approved for export, the permittee must pay a water conservation
fee to the state and, if the water source is fish-bearing, a
reservation must be established to protect fish and fish
habitat. Mr. Walton advised that a business owner interested in
the export of water should review AS 46.15.035 and contact the
water resources section. In further response to Chair Hughes,
he said he was unsure of how long an application would take - if
there are no fish, the process is expedited. For example,
permits to Aleut Corp. for water in Adak took about one year.
Permits to appropriate water are not the final water rights.
12:08:31 PM
CHAIR HUGHES asked whether the Adak permits involved fish.
MR. WALTON indicated fish surveys were needed on the lakes and
outflow streams and fish reservations were required.
CHAIR HUGHES asked all of the presenters to speak to the most
significant hurdle to their businesses and what action the
legislature can take.
12:10:21 PM
MS. ALLINGHAM offered to work with DEC on proposed regulations
or legislation for a bottled water industry in Alaska.
CHAIR HUGHES recalled proposals to export ice and to build a
water pipeline.
MR. WOLF stated that at one time bags of glacial ice were
transported to Japan for expensive bar drinks. Furthermore,
Governor Hickel was ahead of his time and proposed transporting
water out of state in a pipeline.
12:16:46 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Economic Development, International Trade
and Tourism meeting was adjourned at 12:16 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Water Export National Geographic article.pdf |
HEDT 3/12/2013 11:15:00 AM |