Legislature(2023 - 2024)BARNES 124
03/28/2024 10:15 AM House ENERGY
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s):cook Inlet Update | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
March 28, 2024
10:15 a.m.
DRAFT
MEMBERS PRESENT
Representative George Rauscher, Chair
Representative Tom McKay
Representative Stanley Wright
Representative Mike Prax
Representative Jennie Armstrong
MEMBERS ABSENT
Representative Thomas Baker
Representative Calvin Schrage
COMMITTEE CALENDAR
PRESENTATION(S):COOK INLET UPDATE
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
JOHN SIMS, President
ENSTAR Natural Gas
Anchorage, Alaska
POSITION STATEMENT: Gave a Power Point presentation, titled
"Cook Inlet Update."
ACTION NARRATIVE
10:15:46 AM
CHAIR RAUSCHER called the House Special Committee on Energy
meeting to order at 10:15 a.m. Representatives Armstrong, Prax,
McKay, Wright, and Rauscher were present at the call to order.
^PRESENTATION(S):COOK INLET UPDATE
PRESENTATION(S):COOK INLET UPDATE
10:16:12 AM
CHAIR RAUSCHER announced that the only order of business would
be the Cook Inlet Update presentation.
10:17:33 AM
JOHN SIMS, President, ENSTAR Natural Gas, gave a PowerPoint
presentation [hardcopy included in committee packet], titled
"Cook Inlet Update." He began on slide 2, giving a perspective
of the consumers and the duty that the gas supply companies
hold. He said that there is no time to analyze hypothetical or
theoretical ideas, that there must be real solutions. He
continued to slide 3, which displayed a graph of past, current,
and projected gas demand based on different scenarios of use. He
gave further detail on what each part of the graph was aiming to
communicate, as well as detailed current contracts and
agreements between utilities and gas companies. He moved to
slide 4, which showed the cost of additional gas supply in the
Cook Inlet. He further explained a previously mentioned contract
agreement. He moved to slide 5, which displayed an overview
graphic of the contract terms previously mentioned. He continued
to slide 6, which outlined the roles of each gas supply company
in four different proposed projects around Alaska. He moved to
slide 7, where he explained the summary findings based off of
the studies performed on the proposed projects previously
mentioned. He skipped slides 8 and 9, stopping on slide 10 to
touch on how the gas companies could meet peak demand with a
variety of energy sources. He moved to slide 11, which gave
context to the reliability of wind power, which led into slide
12, where he wrapped up his hypothetical of how the gas
companies could combat an overloaded system with no reserve
energy.
10:33:51 AM
CHAIR RAUSCHER interrupted the presentation to inform the
committee that the House floor session was delayed to a call of
the chair.
10:34:41 AM
REPRESENTATIVE MCKAY asked Mr. Sims to return to slides 8 and 9.
10:34:56 AM
MR. SIMS, in response to Representative McKay, brought his
presentation back to slide 8, where he explained how a gas
supply shortage may be avoided through thorough planning,
minimizing impact, and recognizing the impact that gas supply
has to customers. He moved forward to slide 9, to explain how
the storage of additional reserves of gas is critical to energy
security in the Cook Inlet Region. He progressed to slide 13,
which displayed an example of the economic impact that an
increase in gas prices in the Cook Inlet Region would have. He
finished his presentation on slide 14, which emphasized that
there is no unsubsidized energy solution that will reduce the
cost of power or space heating in the next 10 years. He said,
"The second-worst thing for Alaska is to import LNG [Liquified
Natural Gas]. The worst thing is to do nothing."
10:40:55 AM
REPRESENTATIVE ARMSTRONG asked if the 30 percent increase model
is assuming a 7 billion cubic feet (Bcf) shortfall, how much of
each Bcf we are importing and what is the economic impact on the
individual ratepayer.
MR. SIMS said that most of ENSTAR Natural Gas Company's demands
are met with contractual agreements. He said if ENSTAR were to
import gas, assuming a $16 dollar price per thousand cubic feet
(Mcf), it would result in a 30-40 percent increase in cost to
ratepayers. He said that the 30 percent number is reflected
through all of their gas sales customers, not just the Anchorage
School District.
REPRESENTATIVE ARMSTRONG asked how the red parts of the graph on
slide 3 translate to dollar impacts on customers. She emphasized
the importance of providing clarity on how fluctuating gas
prices and uncertainty in energy supply would affect ratepayers.
10:44:32 AM
REPRESENTATIVE PRAX referred to Mr. Sim's previous statement
saying "the second-worst thing for Alaska is to import LNG, the
worst thing is to do nothing," and asked what the third, fourth,
and fifth worst things to do are.
MR. SIMS said that ENSTAR must be very clear on what solutions
are and what solutions aren't. He said that renewables won't
save space heating challenges, but they would relieve pressure
from gas demand. He gave an example of Homer Electric's energy
demand and how ENSTAR handled this year's cold snap. He said
there are very few options for handling a crisis shortage, but
an LNG pipeline from the North Slope would be a real solution.
10:49:00 AM
REPRESENTATIVE PRAX asked if an LNG import facility could be
built before Cook Inlet runs short on its gas supply.
MR. SIMS answered that an important distinction is the scale of
the facility and its importing capability, and whether the state
is to view that import facility as a short-term or long-term
solution.
10:50:19 AM
CHAIR RAUSCHER asked about the business model of ENSTAR, giving
an analogy to a theoretical cylinder of gas to represent
Alaska's total gas consumption.
MR. SIMS said the biggest challenge with the gas supply issue is
trying to minimize direct costs to customers. He said producers
in the Cook Inlet aren't willing to enter into production
contracts. He said that a more expensive short-term solution
that leads to a cheaper long-term solution is okay, if only
temporarily.
10:53:35 AM
REPRESENTATIVE PRAX asked about what solutions are possible in
the short term. He asked if bringing LNG to Alaska on isotankers
would be plausible.
MR. SIMS replied that he has direct oversight of getting LNG
imported, but he has zero control over opening new drilling
platforms in Cook Inlet.
REPRESENTATIVE PRAX asked about the feasibility of offloading
the gas without a major port construction.
MR. SIMS said that there is certainly construction that would
need to be done, but the two main questions are where the gas is
coming from and how much the gas would cost.
REPRESENTATIVE PRAX asked why ENSTAR likes the option of
importing LNG.
MR. SIMS answered that there are no doubts in his mind related
to the supply and cost of natural gas.
10:57:54 AM
CHAIR RAUSCHER asked if the legislature has prepared enough
legislation or tax credits or incentives to bring businesses
that provide energy to Alaska.
REPRESENTATIVE PRAX interrupted to ask what ENSTAR needs from
the state to make importing a viable option.
MR. SIMS, in response to both questions, said that a streamlined
permitting process would be critical. He said if the state were
to subsidize costs, it would be a direct benefit to the
ratepayer. He said once ENSTAR begins importing LNG, most other
options will go away. He asked the legislature to look at other
options for solutions, specifically reliable, realistic
projects.
REPRESENTATIVE PRAX asked which entities need to work together
to evaluate all of the possibilities and make a decision on a
solution.
MR. SIMS asked for clarification if Representative Prax was
asking about a long-term or short-term solution.
REPRESENTATIVE PRAX said the short-term problem is the primary
problem to solve.
11:03:42 AM
CHAIR RAUSCHER said that there are solutions being discussed in
the capitol right now.
MR. SIMS said that there is a lot of work being done and that
the entities that would need to work together are already in
some form of communication. He said it must be a more collective
effort between government entities, supply companies, and
utilities companies to solve the problem in the long term.
11:05:42 AM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 11:05 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| ENSTAR PPT House Energy 3.28.24.pdf |
HENE 3/28/2024 10:15:00 AM |
Cook Inlet |