Legislature(1997 - 1998)
04/15/1997 08:04 AM House O&G
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON OIL AND GAS
April 15, 1997
8:04 a.m.
MEMBERS PRESENT
Representative Mark Hodgins, Chairman
Representative Scott Ogan
Representative Joe Ryan
Representative J. Allen Kemplen
MEMBERS ABSENT
Representative Norman Rokeberg
Representative Con Bunde
Representative Tom Brice
COMMITTEE CALENDAR
Trans-Alaska Gas Line Participants
Van Meurs Report - Suggested Legislative Action
PREVIOUS ACTION
Continued from April 10, 1997
WITNESS REGISTER
BEVERLY MENTZER, Manager
Business Development
Natural Gas Department
Exxon Company, U.S.A.
P.O. Box 2180
Houston, Texas 77252-2180
Telephone: (713) 656-6145
POSITION STATEMENT: Gave presentation on behalf of Exxon Company,
U.S.A.
JIM JOHNSON, Onshore Manager
Partnership Operations
North America Production Division
Phillips Petroleum Company
P.O. Box 1967
Houston, Texas 77251-1967
Telephone: (713) 669-2968
POSITION STATEMENT: Gave presentation on behalf of Phillips
Petroleum Company.
GEORGE FINDLING, Public Affairs Advisor
Gas Commercialization and Marketing Team
ARCO Alaska, Incorporated
P.O. Box 100360
Anchorage, Alaska 99501
Telephone: (907) 263-4174
POSITION STATEMENT: Gave presentation on behalf of ARCO Alaska,
Incorporated.
DR. EDWARD M. ("Ned") PATTON, Section Manager
Southwest Research Institute
P.O. Drawer 28510
San Antonio, Texas 78228
Telephone: (210) 522-3442
POSITION STATEMENT: Gave presentation on behalf of the Southwest
Research Institute.
ACTION NARRATIVE
TAPE 97-18, SIDE A
Number 0001
CHAIRMAN MARK HODGINS called the House Special Committee on Oil and
Gas meeting to order at 8:04 a.m. Present at the call to order
were Representatives Hodgins, Ogan and Kemplen. Representative
Ryan arrived at 8:17 a.m. Sites on teleconference included
Anchorage, Kenai, Houston, San Antonio and Calgary.
Trans-Alaska Gas Line Participants
Van Meurs Report - Suggested Legislative Action
Number 0083
CHAIRMAN HODGINS announced the hearing was a continuation from the
April 10, 1997, meeting on suggested legislative action regarding
the Trans-Alaska Gas System line. He offered a brief synopsis of
the previous hearing, saying, "Commissioner Condon from the
Department of Revenue gave us a work plan from the Administration
and proposals to legislative action. This is based on the Van
Meurs report, and we're looking at some continuing strategy. We
also received a report from Yukon Pacific Corporation, and in a
nutshell, they offered permits and offered to be a portion of the
pipeline and to finance their percentage into work towards the
pipeline."
CHAIRMAN HODGINS noted that they had been in the middle of
testimony from Mark Bendersky regarding a statement made by Richard
Campbell when the previous meeting concluded. When he invited Mr.
Bendersky to continue, Mr. Bendersky offered to answer other
questions but did not testify. After requesting that Mr. Bendersky
remain on teleconference, he called on Beverly Mentzer.
Number 0251
BEVERLY MENTZER, Manager, Business Development, Natural Gas
Department, Exxon Company, U.S.A., testified via teleconference
from Houston, Texas. She specified that she is responsible for
commercialization of the Alaska gas reserves. She indicated she
would focus on one aspect of the work needed to potentially make a
liquefied natural gas (LNG) export project commercially viable,
which is the need to improve the state's fiscal and regulatory
system that would be applicable to an LNG project. "We will also
share our view on the plans proposed for the joint work with the
state that was presented by Commissioner Condon," she added.
MS. MENTZER said, "The state's consultant, Dr. Van Meurs, has
recently concluded that the current state fiscal system that would
be applied to a project does not favor an LNG project due to the
system's regressive nature. And he also concluded that an LNG
project requires that the fiscal system be stable throughout the
project's life. Exxon agrees with these conclusions, and we agree
that addressing these problems is an important and logical next
step in seeking to make an LNG project economic."
MS. MENTZER continued, "Looking ahead, developing a long-term,
appropriate and stable fiscal and regulatory environment for an LNG
project will be both a complex and time-consuming process. Both
the MOU [memorandum of understanding] and HCR 1 provide for the
state Administration and the producers to develop a proposal and
then bring that proposal forward to the legislature for its
consideration."
Number 0382
MS. MENTZER continued, "Exxon has worked with the state to identify
steps to develop a comprehensive fiscal and regulatory proposal
that addresses all the issues that were included in HCR 1. We
agree with Commissioner Condon and believe that the time schedule
presented by the state is aggressive and perhaps optimistic, given
the complexities of fiscal and regulatory issues to be considered.
Nevertheless, we are willing to work hard to progress these
issues."
MS. MENTZER continued, "We believe a process needs to be put in
place and that the state and producers jointly and efficiently
develop an appropriate proposal for the legislature's
consideration. And in that regard, Exxon supports the legislation
that was recently introduced by the Administration because it will
provide for such a process."
MS. MENTZER continued, "In conclusion, it's important that we all
keep in mind that an LNG export project is not commercially viable
today and that fiscal changes alone cannot make this project
succeed, but that substantial cost reductions and favorable market
conditions will also be needed." She offered to answer questions.
Number 0488
REPRESENTATIVE J. ALLEN KEMPLEN recalled that at the previous
meeting, the presentation by Yukon Pacific Corporation indicated a
key item is a project structure that really develops an
understanding among the private sector principals as to
responsibilities. He requested an update on the project structure.
MS. MENTZER replied, "I guess I have to back up a little bit to
answer your question, particularly as it relates to YP's testimony.
You've heard - many people have testified, including the state,
some legislators, Pedro van Meurs and the producers - that an LNG
export project is currently uneconomic, and only YP has testified
differently. And based on their testimony on Thursday, which is
really all the discussion we have at this time, it's apparent that
the Yukon Pacific assessment of the project's commercial viability
is very different from Exxon's view, as well as the view of
others."
MS. MENTZER continued, "So, in looking at the question of project
structure, we're really focused that the logical next step is the
development of stable and appropriate fiscal and regulatory terms
and that a project structure as they described it, i.e., a new
limited partnership, is not needed to do that. Clearly, as the
producers are working together, you know, we've developed an
informal structure, you might call it, to coordinate our
activities, coordinate discussions with the market, and that's the
framework we'll continue to work under as we move forward."
Number 0636
REPRESENTATIVE KEMPLEN asked when Ms. Mentzer thinks it would be
appropriate for a project structure to be established.
MS. MENTZER replied, "That may be more appropriate after you know
you've got an economic project."
Number 0662
REPRESENTATIVE KEMPLEN asked, "Beverly, given the time line that
was set out by Commissioner Condon at the last meeting, when do you
think that the determination of an economic project would be
arrived at?"
MS. MENTZER responded, "Well, 1998 will be a really important year
for doing the assessment to evaluate commercial viability at the
next phase, and I say that because we have a full year of technical
work outlined where we're focusing on our cost reduction efforts;
so you'll have the results of that technical work and then you'll
also have the vast majority of the results of all of the work that
was on the schedule that Commissioner Condon presented. So when
you look at those two pieces - you can say primary fiscal,
technical, also some regulatory issues; you'll have those fiscal
terms and fiscal certainty issues - and then you lay that down and
look at the market, that then you can do another good kind of
assessment of the commercial viability. But the outcome of that
decision depends on our success in the work efforts throughout the
next year."
Number 0757
REPRESENTATIVE SCOTT OGAN said, "Beverly, you mentioned all the
work that has to be done the next year, yet our ... trade
representatives that we consult with in the market countries tell
us that we need to be at least speaking with a unified voice this
year. They stressed how important it was, said the market views us
as dysfunctional. They are getting mixed signals, and they don't
have confidence in our ability, our working together. Do you care
to comment on that? I mean, we're talking about all this work to
do in the next year, and before we decide whether or not we're even
going to talk, is there any reason why we can't speak with one
voice on this, I mean, even [if] it's, `Yeah, we're assessing it
but we're all here working together'? ... I just don't think the
market perceives that there's a real true spirit of cooperation
going on, and I certainly don't."
Number 0848
MS. MENTZER responded, "There are several different issues around
what you're asking, and let me try to address all of them. One, on
the unified message, the major gas owners are unified in their
assessment of the project economics and the forward plan to
increase the project's chance of success. And we fully understand
what is meant by the comments from the state's Japanese trade
representative, and we believe that producers who have gas to sell
are the appropriate parties to talk to the market to avoid
confusion."
MS. MENTZER continued, "And another issue that comes up around that
question is the question of, `When do you make a proposal to the
market?' And that's a little different than just talking to the
market and keeping them apprised of your progress, letting them
know ... how you're moving in regards to the project. With the
current project cost and fiscal terms, the project cannot be
developed that satisfies both the market needs and the returns that
would be expected from necessary investors or financial lenders.
And if you look at it on the flip side, if you say, `Well, at
competitive LNG prices, what can we do,' then the economics are too
weak to attract the needed investors. So, at attractive investment
rates, the LNG prices are not competitive; so you're kind of in a
Catch-22 situation here. You can't satisfy ... all the parties in
the chain."
MS. MENTZER continued, "And just an aside: It was interesting when
I was over in Japan, on the trip in November with the Governor,
that one potential buyer had told us that they had reviewed the CS
Boston (ph) report and thought that the pricing assumptions in
there were too optimistic. So what we're struggling with is we
know the market wants competitive prices. They're not willing to
pay a premium. They would like Alaska gas, but they don't want to
pay a penny more than they have to for it; so we know what they
would consider an acceptable proposal. And until we have our costs
and fiscal terms and economics together where we can make that
acceptable proposal, that's really what we need to work on before
we make a formal proposal to the market."
Number 1003
REPRESENTATIVE OGAN asked whether Ms. Mentzer was confident that by
the time everything was done to make the project competitive, it
would not be too late for the "infamous market window."
MS. MENTZER replied, "We are comfortable that we will not be too
late because we do not believe there is a market window that
closes. The demand projections in the Far East continue to grow.
2005 is when the opportunity -- that a gap between supply and
demand develops, and it continues to expand through 2010-2015, as
you see economic growth in Japan, Korea, Taiwan, China and some of
the other Far East countries. So the key is making sure that we
get to the market with a proposal that meets the gap that they need
to fill, ... to meet their demand, but that it's also at
competitive prices."
CHAIRMAN HODGINS noted that Representative Ryan had joined the
meeting.
Number 1084
REPRESENTATIVE OGAN stated, "Beverly, you said the important next
step is working on the fiscal certainty. Is that correct?"
MS. MENTZER responded, "Well, working on everything that's on the
state's schedule there, as outlined, the combination of fiscal
terms, fiscal certainty and regulatory issues."
Number 1131
REPRESENTATIVE OGAN asked, "And can you suggest what would be the
best approach for that? ... Should we get some legislation out on
the table for discussion purposes this year, have meetings over the
interim and be ready to act early next year on it?"
MS. MENTZER replied, "I feel like the appropriate approach is
consistent with what the state has outlined. There is a lot of
complex work to do when you look at defining a fiscal system. It's
not just setting, for example, the tax rates or the terms, but how
is the LNG valued? How are net-backs determined? How do you write
that into a contract that ... is agreed to by all the parties and
to bring back some really substantial legislation that has the
concurrence of all potential stakeholders? Working on that, to
bring forward proposed legislation in the '98 session, I think,
will be very challenging."
Number 1191
REPRESENTATIVE OGAN asked, "Who do we negotiate the contract terms
with, as a state?"
MS. MENTZER replied, "That's an interesting question. I guess the
way we have viewed HCR 1, and the direction to the Administration
there, is that the producers and other stakeholders that ... the
state may work with are kind of acting as proxies for potential
project investors. Some of them we may know about now - people who
are already in the state - but there may be others who invest in
the project who are not currently a part of this process. So in
working with us and others that the state chooses, we need to at
the same time be thinking that what they're developing might also
be ... used by other parties who will be investors, that aren't yet
identified."
Number 1251
REPRESENTATIVE OGAN responded, "You hit on kind of an important
note there. We're negotiating contract terms with maybe
unspecified players in the contract, and ... they might not like
the terms when they get there or might cause some other
renegotiation. It's a kind of difficult thing to do, is it not?"
MS. MENTZER said, "Correct. We almost view it as maybe it ends up
that there is some overall legislation that's enabling legislation
that the contract is consistent with, but it could be, you know,
there are separate contracts signed with different parties at
different times as they join into the project. But that's just one
approach we've hypothesized."
Number 1299
REPRESENTATIVE OGAN asked who the proxies are that Ms. Mentzer can
envision.
MS. MENTZER replied, "Well, the proxies that we envision now are,
I guess, the same ones y'all have invited to your hearing,
basically."
Number 1324
REPRESENTATIVE KEMPLEN said, "Beverly, you've mentioned about the
administrative work schedule and the fiscal regime, and I guess I'd
like to explore another aspect, which is the technical side of this
project. ... At the last meeting, we had a presentation by the
chief engineer for Yukon Pacific, and he gave an explanation of the
long lead times that were involved in the engineering and ...
ordering some of the more complex pieces of the infrastructure for
the pipeline itself. ... One of the points that was brought up was
the amount of money that would be needed to really invest in
preliminary engineering for this project in order to get a better
sense of what the costs are. Is Exxon committing any resources,
in-house or on a contract basis, to the determination of those
engineering costs? Are you doing any preliminary engineering, or
are you participating in any preliminary engineering for this
project?"
MS. MENTZER replied, "We are definitely doing work technically, in-
house and with contractors. Right now, we have a total of over
about 40 people working on the project. I guess the combined
technical team between Exxon, ARCO and BP is about 35 people, plus
about half a dozen contractors right now who are looking at all
phases of the project from the slope ... on through shipping."
MS. MENTZER continued, "I'd like to clarify, though, there are a
lot of different terms of types of engineering that are being
talked about when you say `preliminary engineering.' We see our
engineering as the very early phase of screening, trying to drive
costs down, identify opportunity, which is different than --
preliminary engineering is when you say, `This project is a go;
it's economic; I've got it funded; we're moving ahead; you know,
let's start ordering long-lead-time equipment.' So, it's kind of
putting the cart before the horse, we feel like, to be talking
about things like that now, when you don't have an economic
project."
Number 1469
REPRESENTATIVE KEMPLEN said, "I'm to understand, then, that from
your statement, that ... the resources to do preliminary
engineering would be committed once the project is determined
economic. Is that correct?"
MS. MENTZER replied, "That's correct, Representative. That would
be the normal progression of a project. You go from screening
engineering to - we kind of call another phase - conceptual
engineering and then into preliminary engineering, then into
detailed engineering and construction and start-up."
Number 1504
REPRESENTATIVE JOE RYAN apologizing for missing part of the
presentation, then stated, "What I've surmised so far - perhaps you
can tell me if I'm correct - is that we're just in an exploratory
stage now, and if we pencil this thing out, it doesn't make
economic sense, the profit isn't there. Is that an accurate
summary?"
MS. MENTZER replied, "I would say that's a good assessment. I
liked your characterization of an exploratory stage, that we're
really working hard to try to make it economic, and if our efforts
this year aren't successful, we'll keep looking at ... what do we
need to do to make it successful."
Number 1545
REPRESENTATIVE RYAN said, "Okay. There's a couple of things of
which I have some concerns. The players in here, whether it be the
producers or whomever, how much of this will they capitalize
personally, and how much will they go to capital markets? Have you
any idea yet what that would be?"
MS. MENTZER asked whether he was referring to financing versus
putting in companies's individual equity.
Number 1565
REPRESENTATIVE RYAN replied, "Well, both, actually. How much money
will the actual producers put up for the project, percentage-wise,
versus how much will they have to go to capital markets to get?
Because capital markets being what they are, they're very
competitive worldwide. I'm just wondering how you're going to get
a commitment on the money, at what rate of return."
MS. MENTZER responded, "Right now, at the phase of the project
we're at, we have not addressed that question; and until you know
how good your project is and how the risks and rewards of the
project are allocated among the various elements of the chain, the
company can't really make a decision on ... what part they want to
be in and for how much equity or interest there. And then the
financing aspect would come along, kind of like preliminary
engineering; when you know you are moving forward, then you really
work the financial markets hard to optimize that financing,
determine ... what sort of debt you might to take on for the
project and how that would be developed with the lender."
Number 1623
REPRESENTATIVE RYAN recalled a presentation by foreign trade
representatives a couple of weeks before and said the people from
Japan and Korea seemed interested but not a lot. He stated, "I was
very much impressed with the report from the people from Taiwan.
They seem to have an undetermined, growing energy need but one that
... seems to be a lot greater than Japan and Korea. ... As you're
exploring this for customers in the market, how much have you folks
looked at Taiwan?"
MS. MENTZER replied, "We have looked at Taiwan, as we've looked at
other countries also. You're correct in your assessment that they
have a very strong, growing demand for LNG that's forecast.
Relative to our project, though, while they might increase their
LNG imports fivefold, the quantity is still relatively small, going
from, like, I think it was, like, 2 to 10 million tons per year
between, like, now and ... 2010, whereas Korea, while the
percentage increase is not as high, the absolute volume is higher."
Number 1694
CHAIRMAN HODGINS requested a synopsis of the structure of the
steering committee and clarification about who the "proxy folks"
are.
MS. MENTZER explained, "I would consider the steering committee a
subset of the total proxy group ... that the state would work with.
But then focusing on that, I would say that the structure is such
that Exxon and ARCO and BP have all agreed to bear the costs on an
equal basis for the work that we do. We develop joint work plans.
We follow up on those together. As you know, we've made some joint
trips to the market; we're not committed to only traveling jointly.
And ... it's not the formation of a new consortium or an entity,
but you could say it's, some ways, similar to joint operations on
the slope where there are still three separate owners but they're
working jointly for a common objective."
Number 1758
CHAIRMAN HODGINS asked, "Then the structure of the steering
committee, who is actually taking the lead on that at this point?
Or is it just a committee of the whole, just visiting about what
might happen?"
MS. MENTZER replied, "It's a shared leadership committee. It's
myself and Mark Bendersky with BP and David Lawrence with ARCO, and
we make joint decisions as to our forward direction. And then
quite frequently, one company might take the lead to help progress
a certain aspect of the work, but still it's brought back for a
consensus, a decision or analysis, basically saying, we kind of
divide up the administrative responsibilities and take turns
leading from an administrative perspective. There is no one
company that has more of a leadership role in the decision-making
than any other company."
Number 1805
CHAIRMAN HODGINS asked, "And then if I might, when would you
possibly see that three-tiered steering committee, or that three-
member steering committee, expanding to something a little bit
larger?"
MS. MENTZER replied, "Mr. Chairman, as far as it expanding larger,
well, first of all it gets back to ... is the project economic and
are we moving forward and are we increasing in our engineering
activities and things like that. We've said all along that ... in
a project this size, there is certainly room for more participants.
And we expect there will be more, but exactly where and how that
evolves, I really am not certain at this moment. It kind of
depends on how much money other potential participants want to put
at risk in the early phases of a project."
Number 1853
CHAIRMAN HODGINS asked, "The results of what comes out of the
steering committee and ... the informal negotiations that are going
on now between the producers, does the state of Alaska, being a 12-
1/2 percent royalty owner, have the opportunity of visiting - and
I would assume that would be through Commissioner Condon - some of
the decisions and some of the process that's going on?"
MS. MENTZER replied that they inform the commissioner and various
other Administration representatives on a regular basis as to what
work is going on and what activities or studies are being
undertaken. She emphasized that it is not so much negotiations as
it is work. For example, areas requiring further investigation,
such as cost-reduction work, are coordinated through the steering
team; they assign responsibilities, get the job done and gather
information needed to continue to assess the project's viability
and help move it forward.
Number 1912
CHAIRMAN HODGINS stated, "Thank you for that clarification. And if
I could sum up, then, this steering committee will continue on with
their scope of work as they define it at this time. And from what
you said, if somebody wants to join that committee, they need to
come up with dollars or a commitment ... for this project. Is that
a correct assessment?"
MS. MENTZER indicated that is essentially correct.
Number 1930
CHAIRMAN HODGINS said, "In keeping the Administration informed,
then, I assume that there'll be times when this committee will be
informed as to what is going on with the steering committee and how
we might be able to assist legislatively. ... Are there plans for
that in the near future?"
MS. MENTZER replied, "Yes, Chairman. We had prepared at your
request kind of a first-quarter activity report that we're prepared
to share with you and your committee at any time so that you can
see the overall activities that are going on. A lot of it
parallels what the state had talked about in their schedule,
focusing on some of the same issues. Then there is the technical
aspect of it and some other aspects that aren't directly on that
schedule that we'd be glad to provide an update on. As to
legislatively, how can you help: I think the key focus
legislatively is in the fiscal arena. That's really ... your
responsibility and a very, very important part of the project. So
anything that can be done to help provide long-term, appropriate,
stable fiscal terms will be very beneficial to the project. And
then I also expect that as we work through the plan for the year
that there will be regulatory issues that may also require
legislation to help reduce the risk in the project and help bring
it along."
CHAIRMAN HODGINS thanked Ms. Mentzer and said, "We will look
forward to scheduling that meeting and finding out a little bit
deeper as to how we can assist in the structure ... and the
progress of the steering committee."
Number 2019
REPRESENTATIVE RYAN said, "Since you have delineated how very much
we're in the bare preliminary stages, the Van Meurs report talks
about different means of royalty taxes and so forth, the back-
ending instead of front-ending. Don't you think it's a little ...
premature for us at this time to start even considering these
things, since we don't have very much information, actual
information, on how the project will go forward, or if it will, or
when it will? ... I am not against some concessions to make the
project possible and successful, but I think it's a little
premature at this time to start discussing those things. What are
your thoughts on that?"
MS. MENTZER replied, "I think it's human nature to not want to move
forward when there are a lot of uncertainties surrounding the
project. Unfortunately, from a competitive perspective, with all
the other projects that are competing out there for the same
supply/demand gap in the market, we can't wait. Most of the
foreign governments, as you know from the Pedro van Meurs report,
establish fiscal terms, contracts, and that's even when companies
are coming in in the exploration phase of projects. And they've
established them for several of the LNG projects already that are
competing in our same time slot, that have some of the same
uncertainties that we have. So while we might like to wait, the
competition won't let us wait."
Number 2097
REPRESENTATIVE OGAN said he was hearing a bit of inconsistency and
stated, "I personally would like to get something that we can work
on over the interim, yet we're told, `Wait 'til we get things
figured out,' and then you just said, `We can't wait.' Could you
clarify, please?"
MS. MENTZER replied, "I'll try to do my best here. I don't feel
like bringing something forward in the ['98, misstated as '88]
session is waiting. There is an extreme amount of work to be done
to develop a fiscal package of the caliber needed to provide
credibility and appropriate fiscal terms for the project. It's not
a quick-fix kind of deal. The contracts are very complex. There
will be a lot of different terms and conditions. Hopefully, we
won't have the same complexities as the oil fiscal regime has had
over time, but some of the same issues we would like to address for
LNG, such as ... how do you value it when you pay your taxes, have
been debated in the state for years and years. And for us to say
we want to get that all figured out ... in the next ... eight
months or before February is a very aggressive task. So, the
feeling that because we're not bringing something forward right now
or in the next two months - two or three months - over the interim
means that we're waiting, I really am sorry you have that
impression because it's not waiting. It's working extremely fast
to meet a very aggressive deadline."
Number 2182
REPRESENTATIVE OGAN said he understood that. However, he was
concerned that "if you guys show up in February, according to the
Governor's bill as proposed, and say this is what you want," there
would be only March through May to get something of this magnitude
through both bodies of the legislature. He stated, "And I'm
concerned with that short amount of time - coupled with the fact
that's just one of many issues that we deal with - that we might do
a poor job if we have all the stuff laid on the table in February
sometime, instead of working on it over the interim as the issues
get more clearly defined with the working group ... that's going to
be putting this together, and then we start dealing with those
legislatively at least in a rough-draft form and get the
discussions ongoing through the interim, when we are ... quite a
bit less distracted and maybe do a more responsible job. That's my
concern."
MS. MENTZER replied, "Okay. Well, we may be consistent in that
perspective, then, because as you notice on the state's schedule,
it says discussions with legislature ... throughout the process.
So the idea is not that you'll get something you've never seen
before in February and then have to digest it, understand it and
decide what you want to do with it ... all in that time period, but
that you will have seen it coming and been aware of the issues and
had some input. Because clearly if we work in a vacuum and then
there's something you don't like, that's not in anybody's best
interest. So we want to try to flesh those things out along the
way so that when it comes into the legislature in February, we have
a reasonable expectation that it's something the legislature would
be supportive of."
Number 2265
REPRESENTATIVE RYAN commented, "My problem right now is in cutting
a bargain when someone comes to the table and cannot tell me
anything about even the feasibility of the project and yet wants me
to make a commitment on a value and a tax and a royalty; that's
kind of like getting a bride because she's just a little bit
pregnant. It makes it very difficult. I saw some original
negotiations with the oil. I've seen what happens in other
countries in the royalty percentage and so forth. I'm afraid I'd
need a lot more information before I'd want to sit down at the
table and put a value on anything. I'm just being a little
cautious. I'd rather err on the side of caution."
CHAIRMAN HODGINS asked whether Ms. Mentzer had concluding remarks
and requested that she remain on teleconference. He then called on
Jim Johnson.
Number 2312
JIM JOHNSON, Onshore Manager, Partnership Operations, North America
Production Division, Phillips Petroleum Company, testified via
teleconference from Houston. He specified that he has
responsibility within his group for the properties that contain
Phillips' North Slope gas reserve, such as Prudhoe Bay Unit and
Point Thomson Unit.
MR. JOHNSON stated, "Phillips Petroleum's interest and involvement
with the North Slope gas project would come about in several ways.
First, we are an interest owner in North Slope gas. We have an
interest in Prudhoe Bay Unit, where along with our 1.88 percent
interest in the oil rim, we have a 0.26 percent interest in the gas
cap. We do have a much larger interest, approximately 12 percent,
in the Point Thomson Unit. And as you may know, Phillips is a
majority owner and operator of the Kenai, Alaska, LNG facilities.
This is the first LNG project to export LNG into Asia and North
America's first and only existing base-load LNG operation. The
Kenai, Alaska, facilities were the first to achieve 27 years of
reliable, uninterrupted LNG deliveries into Asia, and it brought
significant benefits to the state in ... jobs and revenues."
MR. JOHNSON continued, "Phillips is supportive of the efforts to
facilitate the North Slope LNG project. Consequently, Phillips
would be interested in evaluating opportunities to participate in
the Trans-Alaska gas line project, as well as opportunities related
to potential participation in the LNG liquefaction facilities and
shipping elements. Phillips has examined North Slope gas
production, and based on current information, we believe that the
potential exists for this to be economic. Further refinements,
decisions and actions will be needed on several items to bring
about a final conclusion in this regard. This includes studies of
North Slope gas deliverability and costs; the cost of the required
pipeline and other facilities; the tax and regulatory structure;
and the marketing arrangements and prices for the LNG."
MR. JOHNSON continued, "With our interest in Point Thomson and our
past experience in LNG, we'd be in a position to study a number of
aspects of these with a good perspective. I'd like to comment
further on what we feel are some key items here. In the Point
Thomson Unit, Phillips has been actively participating, along with
the operator, Exxon, and other interest owners, in studies to
better define the reserve's producibility and development scenarios
of that field. Results on studies currently underway have been
encouraging in indicating that potential reserves and production
from this field may be better than previously indicated, although
it is too early at this point to define specific numbers."
Number 2417
MR. JOHNSON continued, "Phillips believes that the Point Thomson
gas condensate field could play a pivotal roll in facilitating the
North Slope LNG project. Point Thomson gas reserves could give the
North Slope pipeline project considerable additional flexibility
and viability. It could supply early gas supplies needed to
accelerate the potential start-up date for the project to coincide
with the earliest market opportunities. Point Thomson could be
developed to supply significant gas volumes in plenty of time to be
ready for the pipeline. This would allow you to have both early
start-up of the project, to capture market opportunities, as well
as allowing high recycling of Prudhoe Bay gas to continue for a
longer time to benefit oil recovery there. Also, Point Thomson
could augment Prudhoe Bay gas deliverability in the longer course
of the project. Point Thomson, along with any other gas-producing
fields on the North Slope, could provide the synergy that should
yield better economics for everyone."
MR. JOHNSON continued, "Finally, having had 27 years' experience in
marketing LNG into Asia, Phillips concurs that a market window for
the North Slope LNG project could open as early as 2005 and that
competition among supply projects for these markets is and will be
fierce. This being the case, Phillips supports the House Oil & Gas
Committee efforts to facilitate timely definition of the project
structure .... [Cut off mid-speech by end of tape]
TAPE 97-18, SIDE B
Number 0006
REPRESENTATIVE OGAN asked, "Do you concur with the view that the
market will continue to open in 2010-2015, or do you feel that the
competition - the projects that are already competing and maybe
quite a bit further ahead in development - will fill that market
and put our project at a disadvantage?"
MR. JOHNSON replied, "We feel that there will be some continuing
opening of the market beyond 2005. We feel that a good opportunity
exists for projects that will be ready by 2005 and that if you are
able to meet that particular window, you would be in the best
situation."
Number 0046
REPRESENTATIVE OGAN asked whether there is somewhat of a
diminishing return after 2005. He noted that they are talking
about a large project compared to many that would be competing.
MR. JOHNSON responded, "From what we see right now, there would be
some diminishment in returns after 2005."
Number 0065
REPRESENTATIVE OGAN asked, "Enough to knock us out of the market?"
MR. JOHNSON replied, "I would not be prepared to say that. It
would not necessarily knock you out of the market."
Number 0080
CHAIRMAN HODGINS said, "We heard a presentation earlier that the
Point Thomson gas unit has a high-pressure gas situation that might
preclude it from becoming a part of this project. Possibly you
could comment on that or what you see would be a time line that
maybe the technical aspect of a high-pressure gas situation in
Point Thomson might be solved."
MR. JOHNSON replied, "We see the high pressure in Point Thomson as
something which can be addressed technically. We do not see that
it presents any hurdle in the development of that field where it
would be producible prior to a pipeline being available in 2005.
The high pressure means that you would have additional
considerations in terms of the facilities and equipment. The high
pressure, of course, yields higher deliverability, and that is good
in many aspects for the project. But these are technical things
which we certainly feel can be addressed and does not cause any
real problem for the Point Thomson field development."
Number 0128
CHAIRMAN HODGINS said, "And, in fact, your statement about fierce
competition after 2005, one of the things that the Oil and Gas
Committee is looking at, and I'd like to refer to Article VIII of
the constitution as far as natural resources, Section 2, General
Authority: `The legislature shall provide for the utilization,
development, and conservation of all natural resources belonging to
the State, including land and waters, for the maximum benefit of
its people.' And that is why this committee is trying to
facilitate this project, understanding that there is a difference
of opinion between when this window will be open and how long the
window is going to go."
CHAIRMAN HODGINS continued, "It is this committee's chairman's
feeling that we need to expedite this in a very reasonable manner,
and we do understand and thank your input into what needs to be
done in order to sell this gas. And ... it's important for us to
go through this process to try to find out who the players are, who
will be involved with this, and to continue along the line of
getting the most aggressive people that are involved with this
project and helping them to see ... their aims, and that is to
deliver gas and get this pipeline built as soon as possible. And
that will be the structure that this committee will have as long as
I'm chairman and as long as we have a viable project in front of
us. And I do thank you, Mr. Johnson, very much for your insight."
CHAIRMAN HODGINS next called on George Findling.
Number 0201
GEORGE FINDLING, Public Affairs Advisor, Gas Commercialization and
Marketing Team, ARCO Alaska, Incorporated, came forward to testify,
saying, "I am here to indicate ARCO's support of the state's
forward plan, sort of taking us back to the original presentation
by the Administration last week. And let me expand a little bit,
briefly, on this."
MR. FINDLING continued, "This work that the Administration is
proposing, along with other steps, will help to advance the Alaska
North Slope gas project. This plan is consistent with both HCR 1,
which calls for the leaseholders and Administration to work
together to identify a stable and appropriate fiscal regime, and is
consistent with the MOU framework. This plan is also consistent
with the Pedro van Meurs report. Now, our analysis of that report
suggests that a competitive state fiscal system will need to be
progressive, back-end loaded for the state take, unchanging,
predictable and likely relief-providing for the sponsors. Now,
while we understand these general requirements, we think that the
Administration's work plan is needed to resolve the actual details.
And I would quickly point out that ARCO plans to provide people and
resources for our part of this effort."
MR. FINDLING continued, "We do believe that the discussions between
the state and leaseholders will be facilitated by a process that
allows free exchange of sensitive data and discussions of
innovative options. We would also support prescribed public and
legislative briefings along the way to maintain public awareness of
the discussions. We see the state fiscal system work moving in
parallel with other activities essential to project viability:
cost reductions, commercial structure development, market
development, federal fiscal incentives and the definition of
economic regulation. Progress is required in all these areas
because improvements in the state fiscal system alone will not make
this project commercially viable. Also, we all need to recognize
that despite everyone's best efforts, economic viability may be
very elusive. For example, Pedro's report shows that Alaska ranks
fifth of nine green field projects on a ROR [rate of return] basis
compared to hurdle rates. And that's at an undemonstrated $12
billion cost."
Number 0303
MR. FINDLING continued, "Let me put the '97 fiscal work in context.
Prior to project sanction, all fiscal and regulatory issues must be
resolved and finalized. Focusing on the state fiscal system, we
believe that we need a fiscal framework completed during the '98
session. And to do that, we believe that the substantial work laid
in the "State and Local Fiscal Modifications" and "Fiscal
Certainty" headings on the Administration's plan is needed before
there will be enough information to introduce the needed framework
legislation."
MR. FINDLING concluded, "Mr. Chairman, in closing, let me thank you
for the opportunity to testify and to restate our intent to try to
move this project to commercial viability and our support of the
state's proposed plan."
Number 0332
REPRESENTATIVE RYAN said, "I still have this feeling that I don't
have enough information to make a commitment to a tax and to a
royalty. I feel that I'm being asked up-front to make these
concessions, to establish a policy, and yet I don't have any
information from the other side. I do have some knowledge. Are
you familiar with the Arctic coal study report? It was done about
three years ago for the potential of the coal in the North Slope
Borough's grandiose plan; they want to build a railroad ...."
MR. FINDLING replied, "No, I'm sorry."
Number 0357
REPRESENTATIVE RYAN stated, "Well, part of the portion showed the
energy needs in the Pacific Rim, and that seemed to be some
original work and some good stuff. And it showed from coal, from
100 million tons a year to 300 in 20 years. I assume that a lot of
that same energy need could be met by LNG. So, the market seems to
be out there, and other people have recognized the market is there.
But we keep getting told about a very narrow window, that a lot of
things depend upon stable policies and deliveries and so forth. I
understand those. I know how markets work, especially commodity
markets. But I'm not getting any other factual information. How
can I put a value on something when I haven't the slightest idea of
what it's going to sell for in the market? How can I establish a
tax policy and establish a royalty share on this end when I have no
information on the other end? ... As an elected official, I have to
be responsible to the state and to the people of Alaska and the
people in my district to ensure that they get a fair share of the
deal. I don't know how I'm going to do this unless I get some more
information."
Number 0400
MR. FINDLING replied, "I think we see the situation the same as
you, and that lack of information is precisely why this work that
we have visualized with the Administration in the coming months is
so critical as to develop the kind of information that we would
then have to understand what is the appropriate state fiscal system
that should be in place. ... And we have that same feeling that you
do that ... there's a tremendous amount of information that needs
to be developed, and that's why this is going to take time. And
there's a comment I've heard; it's, `Real work takes real time.'
And this is one of those cases where we need to develop real
information that's going to give some indication of what state
fiscal system is needed."
REPRESENTATIVE RYAN replied, "Thank you. That's a little more
reassuring that we will receive some more information before we're
asked to make a decision."
Number 0433
CHAIRMAN HODGINS stated, "Part of the problem - and Representative
Ryan, I think, hit it pretty close - was the uncertainty with the
legislature as to, `We're kind of in a fog as to what is going on,'
and that's obviously because you're still at the very early
planning stages of trying to figure out what direction and what
needs to be done. And I understand the enormity of this project;
$12-15 billion is something that takes quite a bit of time to
massage and to figure out all the `ins and outs' because a 10
percent reduction in that, or a 15 percent reduction, is quite a
lot of change. So you can kind of understand our frustration in
trying to come forward with real, hard, viable facts. And I guess
we have to be a little patient with your understanding that ...
those facts are not readily available. However, that will not
change our demeanor at all in keeping everybody on a progressive
schedule to accomplish what needs to be accomplished, whether it's
a `yes' or a `no' or whatever. We will be diligent in continuing
on that."
MR. FINDLING responded, "I often do hear a notion that since we've
had an awareness of this gas for so many years, that surely the
producers must understand exactly what is required. And I guess
I'm complimented by the sense that we have that much insight. But
the fact is, we don't know exactly what's required, particularly on
this state fiscal system. And that's maybe a point I was trying to
make in my testimony when I said that we understand the general
characteristics - the back-end loading, the progressive nature,
potentially relief-providing, the certainty, all of that - but we
don't know the next level of, `How do we actually accomplish that?'
And, again, ... I wish we could say we did have exactly the answer,
could just lay it out, but we don't. And that's why we need to do
the substantial work that we have visualized here."
Number 0527
CHAIRMAN HODGINS responded, "Let me ask you a question, going back
earlier. We've had several businesses come forward and say that
they would like to be involved, that they would like to be a part
of this. And obviously the old adage is, `You put up or you sit
down and you be quiet.' ... I guess one of the frustrations we have
is who's actually in charge. Who's going to assign the franchise?
Who is going to decide who the players are? Is it just something
where they come up and put down their expertise and a pile of money
and say, `Here, I want to be a player'? How does the structure go
forward from here?"
MR. FINDLING replied, "I don't want to sound like a broken record,
Mr. Chairman, but I think the economics are in charge here. And
what you want to do is have an economic project. And ... people
will beat a path to our door if we have an economic project, in
concept, so that I think the idea is to try to develop an economic
project. ARCO has ... basically seen that the way we would like to
do that is through a gas owner/producer-driven sponsor project
development. And ... there's a lot of elements that go into that.
And we've talked about the four working elements in the past of
cost reduction and so forth; I won't belabor those. But basically,
keep working on those and try to migrate this project to something
that's economic, and then -- that we'll have something that people
want a part of."
Number 0605
REPRESENTATIVE OGAN said if they were a jury and had to find beyond
a reasonable doubt that there was a 100 percent good-faith effort
on everybody's part, with all parties `pedal to the metal' on this
project, he could not make that determination. He suggested
reducing skepticism on the part of the legislature by including it
more in the loop, as much as possible, acknowledging some
information is proprietary, for example. He stated, "I know myself
and possibly Representative Hodgins or some other people could be
actually involved in some of the working group meetings on a sit-in
basis, do a little bit of an overview of maybe the executive
summaries of what's been determined so far. And I know I would be
willing to - more than willing to - do that over the interim.
Because I think what I'm hearing here is just, we sit here in this
hearing process, you guys come here and tell us what we're doing,
what you're doing, and we ask a lot of questions, and you guys go
away, and we go do our thing, and then we come back. And you're
right, it's starting to sound like a broken record."
REPRESENTATIVE OGAN continued, "Also I'd think it's important that
this group that works over the interim with the Administration,
that legislative representation is included in that as well. I
think it would facilitate a lot less skepticism. And next year,
... hopefully we'll be getting hard at work moving forward with
legislative initiatives. That's just what I'm suggesting, and I'm
suggesting that to all the producers that that happen. And I'm
available anytime to do that, and I think it would be helpful for
me to just sit in on this steering committee, maybe a steering
committee meeting sometime if it's appropriate, so we can hear what
the discussion is going on amongst producers, not just in this
forum but in real time, real life."
Number 0732
MR. FINDLING responded, "Just a quick comment, Representative Ogan.
I take your comments. I'm not certainly going to be in control of
all the decisions on legislative involvement and whatnot, but we
have two guiding principles at ARCO on this matter. The first is
that the thing we don't want to have happen is that come early
session '98, when we're ready to present results, that it's a big
surprise to legislators. ... And that's the second point, is that
we really support something where legislators can be informed along
the way. What form that takes, I don't know."
Number 0767
CHAIRMAN HODGINS advised, "Basically, we're going to be having a
steering committee report, and I'm going to schedule that as soon
as possible to bring us up to speed. You know, there's a lot of
questions that need to come forward, and hopefully that will clear
some of the fog. You know, we talk about economic and uneconomic,
and in some instances that's a different meaning to different
companies. Something that's uneconomic for one company might prove
to be more economic for another. So there's a lot of
determinations that need to go. I will schedule the steering
committee report that Ms. Mentzer had mentioned - that they would
be glad to give one - and I think that will be the next big step
towards informing the legislature and the public ... as to where
we're sitting and what we're actually doing."
Number 0805
REPRESENTATIVE RYAN said, "It's still not clear in my mind from
listening to the Van Meurs report, looking at the field, the
unitization and so forth; what I basically see is Exxon and your
company have a great share in this gas and would like to sell it
because it's profitable. BP, on the other hand, stands to lose 400
million barrels of oil, which they have in their hand and which
they know what the value is going to be or can sell a forward
contract. And commodity markets being what they are, and forward
contracts being what they are, a lot of people have lost their
shirt and other people have made a lot of money. It appears on the
surface that it's really the share of gas that BP has, as compared
to 400 million barrels of oil, is not a good deal for BP. The gas
for Exxon and ARCO is a good deal because their share of the oil is
proportionately less. Has that been resolved, or is that still on
the table? ... I understand the problem, but I haven't heard a
solution."
MR. FINDLING responded, "First of all, I think you have to ask BP
what their situation is. I think the best answer I've seen is what
was presented to this committee - I don't remember the date - when
Roger Marks (ph) came up and basically gave a presentation on the
unit economics. What I can say is that the discussions within the
steering team have focused on how to advance this project ... in
those four areas. And ... these issues that you're talking about
have not been part of that, sort of part of that effort. So I feel
like we're sort of moving forward on those areas."
Number 0891
REPRESENTATIVE RYAN said, "Having run a small business, a large
business is an order of magnitude more. It's still - the basic
thing is - you have something to sell for which you can make a
profit. You're sure you have that, and then you're speculating on
something else. And markets being what they are, most people would
go with what they have in hand versus what may happen." He said he
would like to hear the final decision on that.
MR. FINDLING replied, "We'll certainly put together some more
information for you on that."
CHAIRMAN HODGINS thanked Mr. Findling and called on Ed Patton to
address a technological aspect of the pipeline.
Number 0926
DR. EDWARD M. ("Ned") PATTON, Section Manager, Southwest Research
Institute, testified via teleconference from San Antonio, Texas.
He stated, "I'm testifying today on behalf of a project team that's
being formed by the Gas Research Institute to develop and
commercialize composite material and steel hybrid pipe technology
that we believe has the potential to make the Trans-Alaska Gas
System project an economic success. This technology has a 20-year
development history, with several successful commercial
applications in high-pressure gas cylinders. However, it has never
been commercially applied in a high-pressure natural gas pipeline."
DR. PATTON continued, "Our project team will include a
technologically advanced ... steel pipe manufacturer, a worldwide
manufacturer of structural composite fibers and a leading resin
manufacturer, as well as an oversight committee representing the
natural gas pipeline industry and the appropriate regulatory
bodies. This team is now evaluating project requirements and
market opportunities, and we believe that we would be ready to
deliver pipe to meet the needs of the Trans-Alaska Gas System
project."
DR. PATTON continued, "The potential represented by the composite
steel hybrid pipe technology, we believe, can yield a 20 percent
reduction in TAGS' project costs through a number of fundamental
economies. First, the `leak before burst' character of the hybrid
pipe will allow the gas line to be placed much closer to the oil
line than a high-strength steel line, saving substantial sums in
right-of-way development and construction."
DR. PATTON continued, "Second, the high strength of hybrid pipe
allows the safe transmission of dense-space gas at up to 3,500 psi,
reducing pipe size and weight relative to lower-pressure systems.
These savings will allow significant reductions in the amount of
energy and labor required to construct the pipeline."
Number 1024
DR. PATTON continued, "Third, by the use of hybrid pipe, the steel
wall thickness is reduced by approximately half, relative to
competing all-steel designs, thereby saving 75 percent of the
required weld material in an all-steel design."
DR. PATTON continued, "Fourth, the steel liner of the hybrid pipe
will use conventional pipeline steels, allowing the use of well
accepted construction techniques by the pipeline industry and
saving costs relative to high-strength steel designs that use
materials that are difficult to fabricate."
DR. PATTON concluded, "There are other advantages to the concept,
but these few examples illustrate the substantial potential that
this concept holds for the TAGS project. The project team
represented by the pipe manufacturers, Southwest Research and ...
the Gas Research Institute would like to meet with other players in
the TAGS project to develop a basis for working together to make
this project an economic success. We're available at your
convenience for further discussion and, again, thank you for your
time and attention."
Number 1090
REPRESENTATIVE RYAN stated, "If I remember correctly, Dr. Patton
was up here and gave a presentation and it seemed intriguing.
Doctor, have you had an opportunity to contact the potential buyers
of this pipe? Have they shown any interest?"
DR. PATTON asked for clarification.
REPRESENTATIVE RYAN said, "The people who may want to put in a
pipeline. Have you had an opportunity to discuss the advantages of
what you're talking about with them?"
DR. PATTON stated, "We have left information with all of the people
that are involved in the Trans-Alaska Gas System line, and we also
have talked to several of the major `pipeliners' and have letters
from them in support of our project."
Number 1132
REPRESENTATIVE OGAN said, "Dr. Patton, you said you have letters of
support from the `pipeliners.' Could you be a little bit more
specific who that is?"
DR. PATTON replied, "There are four organizations that run
pipelines in the states. I have that information someplace here in
my office. But they are large pipeline operators in the United
States, down in the Lower 48."
Number 1160
REPRESENTATIVE OGAN stated, "But you said that this ... hasn't been
tested or actually isn't in place; it's a technology that you're
proposing."
DR. PATTON responded, "There is one piece of this pipe that has
been put in the ground in Jamesville, Wisconsin, that's been in
operation as a gas line since, I believe, the late 80s. There was
300 feet of the line that was put in the ground, and sections of it
have been removed. ... That was done as a demonstration of both the
fabrication technology and the ability of the fiberglass to
withstand being in soils. And so far, there hasn't been any
degradation of the pipe whatsoever."
Number 1200
REPRESENTATIVE OGAN said, "This pipeline, ... that's two separate
things. There's a 300-foot piece and then there's another one
somewhere else that's actually in use, and that's under high
pressure. Is that correct?"
DR. PATTON replied, "There are no high-pressure pieces of this in
use yet."
Number 1220
REPRESENTATIVE OGAN expressed some concern and said, "Any of us
that have been on the slope know that even steel breaks, and things
just break at 70 below. Being a boat builder, and having worked
with epoxy resins and fiberglass and whatnot, that ... gets pretty
brittle when it's cold as well. Has there been Arctic testing
done?"
DR. PATTON replied, "We haven't done testing of the pipe itself.
We had a meeting ... of the project team last week in Chicago, and
those issues were addressed with the resin manufacturer. And ...
it's common amongst our project team now -- we understand that we
have to have a very flexible resin that's able to stay flexible
down to about 100 below. So, those issues are all going to have to
be addressed in the development program for this pipe before it is
made into a ... commercially available and commercially viable
product."
Number 1280
REPRESENTATIVE OGAN suggested if they were not already doing so, it
would probably be worthwhile to test some of that material on the
slope or another extremely cold place because pipelines expand and
contract and the temperatures are extreme.
Number 1317
CHAIRMAN HODGINS said, "I would hope that you would keep us
informed, Dr. Patton, on your progress. And we would be glad to
share that with the public as you bring it forward to us."
DR. PATTON responded, "We'll definitely keep you informed."
CHAIRMAN HODGINS asked whether committee members had questions of
any of the speakers.
Number 1356
REPRESENTATIVE OGAN requested that all the producers get back with
him at some time in the future about the level of involvement that
legislators could have in the whole process.
Number 1375
CHAIRMAN HODGINS offered a recap, saying it is important for this
committee, this legislature and this Administration to push forward
in an appropriate and expeditious time frame, so as not to lose the
market availability for Alaska's natural gas. He stated, "We've
heard somewhat conflicting windows of opportunity. We feel that
the pipeline cannot be built until the year 2005, maybe a little
bit later, maybe a little bit earlier if we can get some breaks,
which I am not too optimistic about."
CHAIRMAN HODGINS said it is important that the committee and the
Administration continue forward with necessary legislation. They
must work in concert with the federal government in its taxing
ability and with local municipal governments that will be impacted.
He believes it is extremely important that they work with the
producers and, especially, the potential customers.
CHAIRMAN HODGINS stated, "If we can start coming forward with one
protocol, with one message, I think that this project will be
further enhanced. I think that ... while it may be premature at
this time to anticipate that we can come forward with one message,
that will be one of the goals of this committee is to try to prompt
the players, once we identify them, into a single message for our
customers in the Orient around the Pacific Rim. And I think it's
extremely important to continue to hold everybody's feet to the
fire, to make sure that we are moving as promptly and as quickly as
possible."
Number 1486
CHAIRMAN HODGINS continued, "I will maintain that this committee
will become a referee in that respect as far as keeping folks on
target and continually pushing. We will have as many hearings as
need be, to facilitate communication and ... to keep the various
parties energized and to keep them on target. We will be meeting
several times during the interim. We will be looking at
legislation that comes forward and we'll be making recommendations.
The legislation that's come forward from the Administration, there
[is] probably going to be quite a bit of work done to that. There
is a feeling in the legislature from some of my colleagues that we
probably don't need all of that legislation. We'll have to have
hearings to determine that. There is a feeling that the quicker
that we get our work done, the quicker that this pipeline is ...
going to be constructed. And so with that, I will reiterate one
more time that it is going to be the quest of this committee to
move this project along in a very expeditious manner. Would there
be any further discussion?"
Number 1586
REPRESENTATIVE RYAN commented, "We all want to see this. We've
known the bumper stickers we've seen about `please, Lord, give me
one more pipeline' and so forth. Let's not be so precipitous in
our actions on the euphoria of a new economic development that
we're not cautious enough to make sure we've taken the necessary
things for the people of Alaska and to make sure that we cut a deal
that's good for the state and for the people. We need to be a
little more sagacious, I think, and not rush headlong into
something."
Number 1622
CHAIRMAN HODGINS said, "That is part of the equation, is to make
this thing profitable not only for the producers but for the people
of the state of Alaska, both individually as job opportunity and
investments in the state and also the revenues that would be
generated through the state for operations and capital
improvements."
ADJOURNMENT
Number 1645
CHAIRMAN HODGINS adjourned the meeting of the Special Committee on
Oil and Gas at 9:27 a.m.
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