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.
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 Company
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 Company ("ENSTAR"),
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.
10:34:41 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 whether the 30-percent increase
model is assuming a 7 billion cubic feet (Bcf) shortfall, how
much of each Bcf the state is importing, and what the economic
impact on the individual ratepayer is.
MR. SIMS responded that most of ENSTAR'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
ENSTAR's 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
that "the second-worst thing for Alaska is to import LNG, the
worst thing is to do nothing," and he 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 renewable energy
("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.
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 responded that the biggest challenge with the gas
supply issue is trying to minimize direct costs to customers.
He said producers in 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 whether 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 echoed the query by asking 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. In further response to Representative Prax and Chair
Rauscher, he 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 |