Legislature(1999 - 2000)
01/27/2000 11:20 AM House O&G
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON OIL AND GAS
January 27, 2000
11:20 a.m.
COMMITTEE CALENDAR
PRESENTATION: Alaska Gasline Port Authority Plans for
Commercialization of Alaska North Slope Gas
TAPE
00-6, SIDES A AND B
CALL TO ORDER
Representative Whitaker, Chairman, re-convened the House Special
Committee on Oil and Gas meeting at 11:20 a.m. [This meeting was
the second of three held on the same date. This second meeting
was a continuation of the one scheduled for 10:00 a.m., and was
further continued to 1 p.m.]
PRESENT
Committee members present at the call to order were
Representatives Dyson, Phillips, Green, Harris, Porter, Kemplen,
Smalley, and Whitaker.
SUMMARY OF INFORMATION
CHAIRMAN WHITAKER introduced three spokesmen for the Alaska
Gasline Port Authority: Brent Schirfey of Bechtel, Inc.; Dave
Cobb, Mayor of Valdez; and Hank Hove, Mayor of Fairbanks North
Star Borough.
HANK HOVE, Mayor, Fairbanks North Star Borough, narrated a visual
presentation, "Alaska LNG Gasline Project, Overview and
Benefits." In that presentation, he said:
The project involves treating and transporting natural gas
via pipeline from Prudhoe Bay to Valdez, essentially
paralleling the Trans Alaska Pipeline System (TAPS). Plans
call for converting the gas to liquid natural gas (LNG) at a
site near Valdez, and shipment of LNG to Far East markets.
Facilities will include a gas conditioning plant at Prudhoe
Bay, an 800-mile pipeline with the capacity to carry up to
four billion cubic feet of gas per day, and an LNG plant at
Valdez to chill the gas to a liquid.
Technical and environmental challenges include: (1) building
and operating in a harsh, cold-weather environment, including
areas of permafrost; (2) transporting chilled gas at high
pressure in a long pipeline; (3) preserving sensitive fish
and wildlife habitats; (4) minimizing impact on the ongoing
operation of TAPS; and (5) minimizing impact on existing
Prudhoe Bay operations.
Numerous studies over the past 20 years attempted to define,
design, market and fund an Alaska natural gas project. A
project driven by energy market conditions has not promised
sufficient financial returns to private enterprise. That has
led to the innovative and creative public/private imitative
that the Port Authority is bringing to the table at this
time.
Factors that make this project different from other proposals
include: (1) the substantial fiscal advantage of the Alaska
Gasline Port Authority; (2) the Port Authority focus on a
single project; (3) regulatory efficiency; (4) cost-effective
technology; (5) project economics; and (6) speed of
development.
Benefits to Alaskans will include: (1) lowered power and
heating costs from natural gas; (2) new energy supplies to
stimulate business development statewide; (3) potential for a
spur line to Cook Inlet, providing more gas for consumers
there and for gas-intensive industrial development; and (4)
assurance of long-term gas availability.
During construction, the project will create more than 10,000
construction jobs and contribute $2-3 billion to the Alaskan
economy. Once in operation, it will provide 400 jobs, inject
more than a $100 million per year into the Alaskan economy,
improve the national balance of payments, and contribute
significantly to state revenues. It will improve air quality
and is designed as an exemplary environmental project and for
utmost safety.
North Slope producers will benefit from having to make little
or no capital investment, from significant revenues
generated by the sale of gas, and from increased field life
and rates of recovery.
Current activities of the Port Authority include initiating
gas marketing activities in the Far East and applying for an
Internal Revenue Service ruling to exempt the Port Authority
from federal income taxes.
BRENT SHIRFEY, Bechtel, Inc., continued the presentation,
addressing technical aspects of the gas pipeline project,
including a review of the regulatory and environmental permitting
and approval process. He also discussed: (1) design of gas
processing, pipeline, and LNG facilities; (2) plans for
procurement, transportation, and delivery of material; (3) the
project construction plan and schedule, including environmental
monitoring; (4) labor and skills training requirements; (5)
planning for operation and maintenance; (6) estimates of capital
cost and of operating and maintenance expenses; (7) economic
modeling and feasibility; (8) commercial structuring; (9)
preliminary financing; and (10) plans for assessing and
mitigating risks.
JIM WEEKS, a consultant for the Port Authority, then was
introduced and joined the spokesmen for a question-and-answer
period. Additional information provided in that session
included: (1) the projected time for completion of permitting is
two years, and (2) House Bill 290, "An Act relating to stranded
gas pipeline carriers and to the intrastate regulation by the
Regulatory Commission of Alaska of pipelines and pipeline
facilities of stranded gas pipeline carriers," would have little
or no effect on project plans.
COMMITTEE ACTION
The committee took no action.
ADJOURNMENT
The meeting recessed at 12:12 p.m. to convene again at 1 p.m.
NOTE: The meeting was recorded and handwritten log notes were
taken. A copy of the tape and log notes may be obtained by
contacting the House Records Office at 129 6th Street, Suite 229,
Juneau, Alaska 99801-2197, (907) 465-2214, and after adjournment
of the second session of the Twenty-first Alaska State
Legislature this information may be obtained by contacting the
Legislative Reference Library at 129 6th Street, Suite 102, (907)
465-3808.
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