Legislature(2003 - 2004)
02/19/2004 03:20 PM 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
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON OIL AND GAS
February 19, 2004
3:20 p.m.
MEMBERS PRESENT
Representative Cheryll Heinze
Representative Jim Holm
Representative Lesil McGuire
Representative Norman Rokeberg
Representative Harry Crawford
Representative Beth Kerttula
MEMBERS ABSENT
Representative Vic Kohring, Chair
COMMITTEE CALENDAR
HOUSE BILL NO. 417
"An Act amending the definition of 'project' in the Act
establishing the Alaska Natural Gas Development Authority; and
providing for an effective date."
- MOVED HB 417 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 417
SHORT TITLE: AK NATURAL GAS DEV. AUTHORITY INITIATIVE
SPONSOR(S): REPRESENTATIVE(S) CHENAULT
02/02/04 (H) READ THE FIRST TIME - REFERRALS
02/02/04 (H) O&G, RES
02/17/04 (H) O&G AT 3:15 PM CAPITOL 124
02/17/04 (H) -- Meeting Canceled --
02/19/04 (H) O&G AT 3:15 PM CAPITOL 124
WITNESS REGISTER
REPRESENTATIVE MIKE CHENAULT
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 417 as sponsor.
STEVEN PORTER, Deputy Commissioner
Department of Revenue (DOR)
Anchorage, Alaska
POSITION STATEMENT: During hearing on HB 417, presented
information and answered questions.
JERRY McCUTCHEON
Anchorage, Alaska
POSITION STATEMENT: Testified on HB 417; disagreed with the
proposed natural gas pipeline route to Glennallen and suggested
an alternative route to Kenai.
HAROLD HEINZE, Chief Executive Officer
Alaska Natural Gas Development Authority (ANGDA)
Anchorage, Alaska
POSITION STATEMENT: Testified on HB 417; provided information
and answered questions.
BOB FAVRETTO, Board Member
Alaska Natural Gas Development Authority
Kenai, Alaska
POSITION STATEMENT: Testified on HB 417.
ACTION NARRATIVE
TAPE 04-4, SIDE A
Number 0001
[Representative Holm announced that he was adjourning the
recessed 2/10/04 meeting.]
REPRESENTATIVE JIM HOLM called the House Special Committee on
Oil and Gas meeting to order at 3:20 p.m. Representatives Holm,
Rokeberg, Heinze, McGuire, Crawford, and Kerttula were present
at the call to order. Representative Holm noted that Chair
Kohring was ill and extended members' hopes that he would get
well soon.
HB 417-AK NATURAL GAS DEV. AUTHORITY INITIATIVE
[Contains discussion of SB 247 and SB 241]
REPRESENTATIVE HOLM announced that the only order of business
would be HOUSE BILL NO. 417, "An Act amending the definition of
'project' in the Act establishing the Alaska Natural Gas
Development Authority; and providing for an effective date."
Number 0101
REPRESENTATIVE MIKE CHENAULT, Alaska State Legislature, sponsor,
explained that HB 417 amends the definition of "project" to
include other options for a terminus of the Alaska natural gas
pipeline; it specifically identifies Cook Inlet as a
possibility. He noted that the City of Kenai had passed a
resolution in support of the Senate companion bill, SB 247,
which was introduced by Senator Thomas Wagoner.
Number 0296
REPRESENTATIVE HOLM offered his understanding that the purpose
of the bill is to ensure that Cook Inlet is considered as an
outlet for natural gas from the North Slope.
REPRESENTATIVE CHENAULT said he thought all the options should
be looked at.
REPRESENTATIVE HOLM asked if it could be used in Fairbanks.
REPRESENTATIVE CHENAULT said he didn't believe so. He added
that he thought there were myriad reasons for the belief that
Cook Inlet tidewater should be considered.
REPRESENTATIVE HOLM said it's nice to do this [in statute], but
is probably also in the plan.
Number 0356
REPRESENTATIVE CRAWFORD said he is in favor of the concept and
wants gas to go to Cook Inlet, but the initiative that was done
had a time limit; there is also trouble with the funding. He
asked if this is going to add to the difficulty for the Alaska
Natural Gas Development Authority (ANGDA) to do its work by the
deadline, and if it would cost more money. He said he didn't
want to jeopardize the project.
REPRESENTATIVE CHENAULT said he didn't believe it would extend
[ANGDA's] timeline. He said he thought a lot of this
information was available and that [ANGDA] may need to "pull it
together." He noted that he hadn't specifically talked to
ANGDA's chief executive officer, Harold Heinze, or any board
members about whether they agreed this may be something they'd
like to see. Representative Chenault said if the pipeline is in
Alaska's future, all available options should be looked at,
rather than settling for the only option available.
REPRESENTATIVE CRAWFORD asked if Mr. Heinze should be consulted
to find out whether [ANGDA] would need [another] appropriation
in order to get the work done, and whether Mr. Heinze could get
it done with this addition by the [June 15] deadline.
REPRESENTATIVE CHENAULT said it would be up to the committee to
decide. Legislation to fund ANGDA is moving through the
legislature, and the governor's budget includes added money to
try to push the complete project.
Number 0559
REPRESENTATIVE HOLM indicated Mr. Heinze had been consulted and
thought his work in considering Cook Inlet or Glennallen [for a
terminus] would probably take a couple of months beyond the
June 30 deadline. He said he didn't think [Mr. Heinze] was
going to discount that.
REPRESENTATIVE CHENAULT remarked:
I think that a project that's this important in the
state, realizing we don't want to create a quagmire
where we don't have the option, but we also want to
make sure that we do look at the options that are the
biggest benefit to the state of Alaska -- and I
believe that an option to Cook Inlet is to the biggest
benefit to the state of Alaska.
Number 0643
REPRESENTATIVE HEINZE noted that it appears to be an "either/or"
situation: either to tidewater at Prince William Sound or to
Cook Inlet. She asked, "Do we have to be one or the other, or
... could there be gas to Cook Inlet and a spur line to Valdez,
or visa versa ... or both?"
REPRESENTATIVE CHENAULT replied that he believed it could be
either way, but the options need to be looked at to see which is
in the best interests of Alaskans; then [the better option]
should be moved forward. He added that he didn't want it to be
an "either/or" and that the options should be looked at to see
which is most viable.
REPRESENTATIVE HEINZE asked if the bill could be amended so it
isn't "either/or."
REPRESENTATIVE CHENAULT said he is agreeable to that, but
reiterated the desire to have the option to have that looked
into.
Number 0774
REPRESENTATIVE ROKEBERG offered his view that the bill is
drafted so options include "either Prince William Sound and a
spur line or a tidewater to Cook Inlet." He expressed some
doubt that the current language prohibits any major amount of
delivery to Cook Inlet. If the pipeline is built to Valdez, the
initiative [which established ANGDA] does provide for a spur
line. He asked if one objective is to create a greater amount
of gas flowing to Cook Inlet to be used for value-added
processing to take advantage of "green field and brown field"
industrial site locations. He asked Representative Chenault if
he thought the current spur language was adequate to cover that.
REPRESENTATIVE CHENAULT remarked, "The spur, maybe." He related
the belief that the spur-line language is there, but the option
to take the pipeline to the Southcentral gas grid is a better
option for Alaskan residents. He said if that is the option,
that option needs to be pursued.
Number 0958
REPRESENTATIVE ROKEBERG relayed his understanding that the
current provision and language provide for the Southcentral gas
distribution grid spur line. He surmised it could be
interpreted to mean it could have sufficient passage.
REPRESENTATIVE CHENAULT said that's correct.
REPRESENTATIVE ROKEBERG asked if the intention of the bill is to
ask ANGDA to look at a discrete, stand-alone pipeline that may
not deliver to Valdez, but might deliver to Cook Inlet.
REPRESENTATIVE CHENAULT said that would be one definition of it.
He added that the project needs to be looked at to see which
route is the best for Alaska. He added that the current
authority allows for a spur line to Southcentral Alaska.
Number 1070
REPRESENTATIVE KERTTULA asked if the initiative language allowed
for a spur line to Cook Inlet. She said the grammar in the bill
limits [the options] for a stand-alone pipeline to one or the
other; these aren't spur lines anymore. She questioned the
wisdom of placing a limitation, rather than figuring out what is
best for all of Alaska.
REPRESENTATIVE CHENAULT said it is currently limited to Valdez
with the spur line.
REPRESENTATIVE KERTTULA offered her reading that there was no
spur line to Cook Inlet in the initiative that was voted on.
Number 1222
STEVEN PORTER, Deputy Commissioner, Department of Revenue (DOR),
said the wording of bill, without the underlined provisions
[which add new language], is the initiative as written. He read
AS 41.41.990(3) into the record, which states:
(3) "project" means the gas transmission pipeline,
together with all related property and facilities, to
extend from the Prudhoe Bay area on the North Slope of
Alaska to tidewater at a point on Prince William Sound
and the spur line from Glennallen to the Southcentral
gas distribution grid, and includes planning, design,
and construction of the pipeline and facilities as
described in AS 41.41.010(a)(1) - (5).
Number 1269
REPRESENTATIVE KERTTULA asked if the Southcentral gas
distribution grid is Cook Inlet.
MR. PORTER answered affirmatively.
REPRESENTATIVE KERTTULA said she was unsure because "Cook Inlet"
wasn't specified. She asked whether it is wise to say
"either/or" because she doesn't know whether it is needed. She
said it's sort of all-encompassing. Representative Kerttula
asked if the stand-alone pipeline is needed and whether that is
the distinction.
REPRESENTATIVE ROKEBERG offered his understanding that HB 417
will allow ANGDA to look at an alternate route in addition to
the route specified in the initiative.
REPRESENTATIVE CHENAULT concurred.
REPRESENTATIVE ROKEBERG offered his understanding:
In other words, you could come down the Parks Highway
to Cook Inlet and not go to Prince William Sound with
your language, but you couldn't otherwise. The only
route you can look at in the initiative is the
Richardson-Highway-to-Valdez route. ... The spur is
provided for in the initiative, but only as a spur,
not as ... a direct route to Cook Inlet, and this just
actually, by giving it the "either/or," expands the
options to the authority to look at it.
REPRESENTATIVE CHENAULT said that was correct.
Number 1383
REPRESENTATIVE HEINZE suggested the possibility of the following
conceptual [amendments on page 1, lines 6-7]: after "on",
delete "the North Slope of Alaska to tidewater at a point on
Prince William Sound" and insert "and/or a spur line"; and on
[page 1, line 8] following "grid", insert "and/or to tidewater".
REPRESENTATIVE ROKEBERG said the drafting manual doesn't provide
for "and/or".
Number 1434
REPRESENTATIVE ROKEBERG requested verification about the
legislature's right to revise an initiative. He said he thought
[the legislature] had the right to make some amendments, but
couldn't change the substance. He expressed concern about the
legal ability, within a two-year window, of the legislature to
take this action, and suggested it should be addressed on the
record.
REPRESENTATIVE CHENAULT said the question has come up, but he
didn't have anybody from Legislative Legal and Research Services
to speak to it. He offered his understanding that as long as
[the revision] is adding to the initiative and not taking away
from it or restricting the rights that were provided in it, then
it is legal for the legislature to [make modifications].
REPRESENTATIVE ROKEBERG suggested it would be appropriate to
clarify it. He recalled his experience that the legislature has
acted to modify initiatives, but normally with the consent of
the initiative's writers. He said there is a certain statutory
basis on which [the legislature] can and cannot act, so it is
important to ensure that this is within that purview.
Number 1564
JERRY McCUTCHEON, Anchorage, related his view that unless any
gas line from the North Slope serves Anchorage and Kenai, no gas
line should be constructed. He remarked, "It's not a matter of
would be allowed; I'm talking about being mandated." He said no
doubt an all-Alaska liquid natural gas (LNG) line could deliver
gas to Los Angeles more cheaply than a 2500-mile gas line to
Alberta and the Lower 48. However, can Alaskan LNG compete with
world LNG? "After going through ... 800 miles of gas line, the
answer is no," he answered. He continued:
I think you people are thinking of a gas line or gas
in a reservoir as water in a tank. It doesn't work
that way. If that were true, the south 48 states
would not be needing gas from Alaska. It's pressure-
dependent, and you're going to lose a lot of pressure
real quick at four and a half billion cubic feet per
day for the Alcan, and another couple of billion cubic
feet per day for an LNG line, so I think you're going
to find yourselves limited to about 2 billion cubic
feet a day.
MR. McCUTCHEON mentioned perhaps providing some old reports he
had relating to gas-withdrawal rates and past oil-production
"crashes."
Number 1696
MR. McCUTCHEON suggested amending page 1, line 8, following
"Glennallen", by adding "Livengood, to Nenana down the Alaska
Railroad to about Willow to Kenai". He said [the suggested
amendment] was BP's choice for an all-Alaska gas line;
furthermore, it is easier, cheaper, and does more for Alaska.
Mr. McCutcheon said an independent engineering firm did a study
for somebody, but wouldn't tell him who it was, and he suggested
that the economic studies could be bought.
REPRESENTATIVE ROKEBERG thanked Mr. McCutcheon for his interest
in this subject, and his long interest in the activities of the
legislature over the decades. He suggested that passing the
bill as written would basically do what Mr. McCutcheon had
suggested with his proposed amendment, and it may have a little
more flexibility. He said rather than be specific about the
exact route, he thought this [bill] would accomplish Mr.
McCutcheon's goal. He asked Mr. McCutcheon if he agreed.
MR. McCUTCHEON replied that he disagreed. He suggested [the
State of Alaska should attempt to purchase] BP's studies. He
called the route from Glennallen a "Mickey Mouse" route and an
afterthought, and said he didn't think it would ever come to be.
He remarked, "I think you have to look at the best shot you
have, and the best shot you have is to Kenai." He noted that
there is a lot of money tied up in this, and he remarked, "If it
takes another year, it takes another year."
Number 1857
HAROLD HEINZE, Chief Executive Officer, Alaska Natural Gas
Development Authority (ANGDA), testified:
Bringing gas to Cook Inlet is extremely important for
two reasons. Number one, it's specified in the law
itself that the spur line be looked at. But the
second thing is, even a preliminary glance at some of
the benefit analysis work we're doing suggests that
when you're dealing with a couple hundred thousand
residents of Alaska and you're looking at heating
prices and electricity prices that could double over
the next five to seven years. And here's an
opportunity to prevent that from happening. That's a
pretty significant impact right there. ... For that
reason alone, we have put a lot of priority on looking
at the spur line.
Number 1915
REPRESENTATIVE HOLM asked Mr. Heinze if he was talking about a
significant cost-benefit analysis.
MR. HEINZE explained that one high-priority study [for ANGDA] is
a full benefit analysis of the entire project and its elements.
He remarked:
Currently, people have tended to look at the decisions
we're faced with here on which project or what line or
how to do this on strictly sort of a rate-of-return
approach, like we were an investor. ... I'm not going
to say we're going to ignore economics, but there's
more important things than that. For instance, some
people have just used the measure of the revenues to
the State of Alaska, and again, while it's important,
it doesn't capture anywhere near the real impact on
most Alaskans - the availability of gas itself; jobs;
the economy; the growth in property values, which
represent most people's savings account. ...
So, all those kind of factors are important, and we
are, right now, building at a model which integrates
all those benefits. And I'm just suggesting to you
that without even having done the arithmetic to all
the other avenues, one of things we will find is that
there is a lot of benefit ... in bringing gas to the
broad Cook Inlet area.
It's a no-brainer in my mind that that will be found.
What we are doing is, we've proposed when we get our
additional funding, on a very high-priority basis, to
study the spur line from Glennallen in, because we
have no cost estimate for that at this time. We would
look at a range of pipe sizes from 20-inch on, with
the 30-inch.
Number 2033
MR. HEINZE continued:
That range of pipe sizes would accommodate, very
broadly, volumes which are consistent with either ...
the current usage or a much expanded usage of gas in
the Cook Inlet area. Secondly, ... because of
testimony ConocoPhillips made to us last July, we are
aware that there was one study done of a major look at
pipelining from the North Slope direct to the Cook
Inlet area, and then turning it into LNG. ...
While ConocoPhillips was kind enough to share the
conclusion of that study, there was really no
information made available from it in any level of
detail. BP [and] several other companies participated
in it. I'm sure it was a fairly good-quality study,
in that, as I recollect, the price tag was seven or
eight million dollars that they told us they had to
spend. ... That would buy a pretty good feasibility
study of the route.
Third point is, one of my difficulties right now is
keeping straight how accurate you want the answers to
be. We are asking for funding; we are doing work for
... a feasibility study, and very frankly, all we're
trying to guard against is ... decisions to not
proceed. ... If we decide not to proceed and it's the
wrong decision, we're going to feel really bad. ...
We're spending enough money to guard against that,
that if we do ... at the end of the day reach a
negative decision, we ... at least know we gave it a
good go.
That's an entirely different level of study required
than, say, choosing between two routes, especially if
the two routes end up being fairly close in their cost
estimates, and if there's only, ... say, a 5 percent
difference in the cost estimates between these two
routes, if you put us in the terrible dilemma, then,
as to how you spend money and what you look at. ...
Also, I would point out ... that we are looking at
other legislation which would broaden ... the
consideration of the business structure of ANGDA. ...
For instance, it may be that we could ... go back to
the companies that looked at a more direct route or
some other route other than the spur line in from
Glennallen, and say to them, ... "If we had enough
information, maybe we could look at how our business
structure might enhance the economics of that project
and how it might work better as an authority project
than when you looked at it."
Number 2184
MR. HEINZE continued:
[In] all of our discussions so far, we've looked at
all these amendments from the point of view [of] ...
if they added to the direction that ANGDA was given,
that was fine; as long as you didn't tell us to not do
something that we had, by the public, been instructed
to do, we had really no objections. We consider it as
a friendly amendment. I have also ... tried to say,
"Please, no unfunded mandates." ... Gladly, the
authority will do whatever you wish, but if you tell
us to do something that is very detailed and
challenging, I will tell you that the funding we've
requested doesn't provide the room to do that.
Number 2225
REPRESENTATIVE HOLM asked if [the bill] would add more work that
could not be done with [ANGDA's] present amount of funding.
MR. PORTER said he thought Mr. Heinze offered a good
perspective. He explained that feasibility is being looked at.
For example, if $9 million to $10 million is spent on an
industry study and if it shows that there is a relatively close
cost range between a pipeline to Cook Inlet and a pipeline to
Valdez, the issue really isn't the cost of the pipeline either
way; rather, the issue is feasibility and whether it can be
determined that this can be an [economically viable] project.
He said choosing one route over the over is not a significant
factor because they are so close in price at the level of the
analysis being done. He suggested [Mr. Heinze] should consider
it. Moreover, in terms of the state's position, ANGDA should be
looking at all in-state gas benefits because [the state's]
responsibility is to the residents of Alaska. Mr. Porter
remarked:
We don't believe that ... whether or not you spend
additional incremental money researching a specific
line from Fairbanks to Cook Inlet is incrementally
important right now. Should that be a part of their
overall responsibility in terms of ... the longer
term? Yes, in terms of the next five or six months.
... In terms of the developmental plan, I think that
... it doesn't add ... a significant amount of
increase to responsibility or work to come up with
those answers, because the two routes, from a
historical standpoint [as] we look at the data ... and
the research that's been done, they're fairly close in
economics between the two of them.
Number 2342
REPRESENTATIVE HEINZE said she has been vocal about the shortage
of gas, particularly as it relates to [the state's] utilities,
and so she is very supportive of this. She asked Mr. Heinze to
comment on the bill.
MR. HEINZE said the preliminary look [ANGDA] has taken in making
some very rough estimates in costs of the spur line in
Glennallen and "kind of backing up the other numbers of costs we
have" would indicate gas could probably be delivered into the
Cook Inlet area for about the average gas price that exists
today, about $2.25 to $2.50. He said in looking at current
studies relating to new supplies being brought on line in Cook
Inlet, the price that's suggested is probably twice that number.
He remarked, "That number will translate directly into
everybody's gas bills and electricity bills in the broad Cook
Inlet area."
MR. HEINZE said the thought is that it's enough of an incentive
to look hard at how gas is brought here. He explained that one
difficulty of doing this study is [determining] the level of
commercial and, in particular, industrial activities that occur.
Currently, the big gas users in Cook Inlet are the Kenai LNG
plant and the Agrium plant, and those volumes are key to making
the economics work. He said the future of those facilities
isn't known; he proposed looking at a range of pipe sizes,
because that would cover the extremes of those plants'
continuing their current operations as well as additional
opportunities that may be found. He said on a feasibility
level, that's all he has to work with right now, and if one of
the companies or somebody else would like to provide a lot of
information, he'd be happy to "stew it into the equation." He
said he didn't believe [ANGDA] had the time or money to go out
and develop, design, and do other things for all the variations
on the table right now.
Number 2497
MR. HEINZE, in response to a question from Representative
Rokeberg, said he'd taken no position on the bill. Rather, he
was pointing out that [ANGDA] absolutely agrees with the part of
the bill that says looking at Cook Inlet is very important, and
[ANGDA] intends to do that. He said he'd prefer to do it in the
broadest way possible. If it is really important to the
legislature to look at direct routing to Cook Inlet, he'd be
happy to do that, he added.
MR. HEINZE remarked, "Until you tell me that's what's really
high on your list, and you tell me I can go talk to the oil
companies and offer them some money to buy a multimillion-dollar
study, I don't know how I can do much more than what I'm doing,
which is basically a feasibility study." He said as Mr. Porter
explained, [the legislature] can tell him to do this, but beyond
the feasibility level he won't do any more work than he is doing
right now. He said if [the legislature] wants a route
comparison, that's a much more detailed question than he is
prepared to take on right now at these funding levels.
Number 2571
REPRESENTATIVE ROKEBERG said he tended to agree with Mr. Heinze
that this would be an unfunded mandate. He asked for a short
update on the funding proposition he'd recently read about in
the press about requests of the administration and [ANGDA]. He
said [ANGDA] has requested $2.15 million to complete its work
"when you have recommendation to increase that slightly and then
expand the scope of work that seems somewhat along these lines."
He asked if the request is before the House Finance Committee.
MR. HEINZE explained that SB 241, which provided the
supplemental funding, was already heard in the Senate Finance
Committee, and is at the Senate "leadership's desk." He noted
that he'd testified on a House bill sponsored by Representative
Croft that has been through two committees. He remarked, "I
think ... we're kind of wherever the leadership wants to be on
both the bills and both the houses."
MR. PORTER responded that the amount is $3 million to the
Department of Revenue (DOR) on behalf of the department and the
Department of Natural Resources (DNR), Department of Law (DOL),
and ANGDA to deal with stranded gas and with ANGDA's
responsibilities to complete its obligations under the statute
[created by Proposition 3, the ballot initiative].
Number 2695
REPRESENTATIVE ROKEBERG offered his understanding that if the
legislature were to pass this bill and expand the scope of the
authority, $3 million wouldn't be adequate to do the additional
work.
MR. PORTER replied:
Because of the level of responsiveness, I guess you've
got to understand what the authority's responsibility
is underneath the development plan. It really is to
cross this ... next hurdle, ... the research they're
doing. And that's why I mentioned that it doesn't
matter if they're looking at Valdez or at the Cook
Inlet, because the economics of both are very, very
close together in terms of ... 5 or 10 percent, within
a range. ...
Really, what we're looking at, ANGDA's responsibility
right now, is really looking at their basic business
structure, financing auditing, those types of
developments that will significantly impact the cost
of service. ... If they can ... cross that hurdle to
basically understand if they're a basic economic
venture, then ... the details of whether or not it's
Valdez or Cook Inlet isn't critical, and I don't
consider this bill to add incremental costs to their
responsibility.
It's up to the legislature on whether or not they
expand it. In terms of ... our beliefs about the
Alaska Natural Gas Development Authority, we believe
that they ought to be looking at all the gas
opportunities that the state has to utilize in-state
gas use and to benefit the state. This is one of
them. ...
This is the people's authority; their responsibility
is to be answerable to the people for in-state gas for
everybody. That could be Yukon River; it could be the
coastal communities; it could be Southeast. And all
those opportunities may kind of fall out of the
options if we end up with a major trunk line to Canada
or if we don't do an LNG line either to Cook Inlet or
to Valdez.
Number 2799
MR. HEINZE clarified that as long as it's understood that this
amendment would affect the work he's doing in the feasibility
study, then this is a burden [ANGDA] can stand; it's doable at
the feasibility level to look at this. If the question being
asked is which of these two projects or routes is better,
however, that's more work than he is prepared to do right now.
REPRESENTATIVE HOLM related his understanding that the bill
doesn't ask Mr. Heinze to do that.
REPRESENTATIVE ROKEBERG said he thought it would put ANGDA in
the position of making a recommendation, because it's an
"either/or" in a sense and begs for a comparative analysis. He
said he understands Mr. Heinze to be saying he could do a
feasibility study, but to judge which would be superior or to
recommend a route would be a further burden.
REPRESENTATIVE ROKEBERG expressed concern about the tight
timeframe. He remarked, "I think we'd me remiss if we didn't
look at all the alternatives, and I think that's what Mr. Porter
was saying here, so there's some nuances here that are not quite
translating out." Representative Rokeberg said he is in favor
of the bill as written, but is concerned about not properly
funding it and getting the answers to the public and about
making valid choices.
Number 2904
REPRESENTATIVE HEINZE agreed. She said Cook Inlet has to have
gas, and asked what would happen if [Cook Inlet] wasn't included
in the bill.
REPRESENTATIVE ROKEBERG said he'd support the bill and adequate
funding for [ANGDA] "in working with the Department of Revenue
to make sure they have adequate funding to do the job." He
remarked, "This is too important an issue to be penny wise and
pound foolish." He emphasized the need, when doing a
comparative analysis, to look at the alternatives and have
adequate funding in order to do it in a reasonable timeframe.
Number 2999
REPRESENTATIVE CRAWFORD said he didn't want to do anything that
sinks the larger project under excess weight, and wants to get
gas to Cook Inlet as well. He said he thought that was being
done with the spur-line concept. He expressed some concern with
the "either/or" language.
TAPE 04-4, SIDE B
Number 3003
REPRESENTATIVE CRAWFORD continued, suggesting there may be
enough land for a port for the gas near Valdez.
REPRESENTATIVE ROKEBERG said it is pretty limited.
REPRESENTATIVE CRAWFORD told members he wanted to see [ANGDA]
move ahead and make the timeline, but was highly concerned that
this bill muddied the waters. He added, "I don't have any
doubts that if we get gas coming down to Southcentral ... we
will get gas in Cook Inlet."
Number 2953
REPRESENTATIVE HEINZE asked Representative Rokeberg if an
amendment could be added in order to move the bill and provide
more comfort.
REPRESENTATIVE ROKEBERG said he thought the wording could be
restructured, but he didn't have an idea without analyzing it
further. He remarked that an "either/or" seems to beg for the
comparative analysis leading to a recommendation as to which
line is better. He mentioned perhaps adding language that
merely introduced the feasibility level, which Mr. Heinze had
indicated he thought was doable at this juncture.
REPRESENTATIVE HOLM asked Representative Rokeberg if he was
offering a conceptual amendment.
REPRESENTATIVE ROKEBERG said he wasn't sure. He then suggested
moving the bill out with a proviso that [the House Resources
Standing Committee] make a decision after conferring with the
sponsor. Saying he thought this was an important bill, he
mentioned a backlog in the current committee.
Number 2818
BOB FAVRETTO, Board Member, Alaska Natural Gas Development
Authority (ANGDA), said he understands funding mechanisms that
provide [ANGDA] with the ability to give answers to the
legislature and the administration by June 15. Noting that
[ANGDA] hasn't received the money it asked for, he expressed
concern about doing this as quickly as possible and being
fiscally responsible in doing so. He explained that there isn't
much time left to respond to what was sought in [Proposition 3].
MR. FAVRETTO said he thought there was agreement that [ANGDA]
needed to expand what it does, but it would cost money. He
indicated the issue has to be addressed, and said he didn't want
this slowed down. Mr. Favretto said he didn't think it was
necessary to change the language in the amendment because it is
pretty clear. He noted the sense of urgency from Agrium,
ConocoPhillips, the community, and [the utility companies].
Number 2687
REPRESENTATIVE ROKEBERG said the timing and scope need to be
decided; [ANGDA] needs additional funding and/or the scope
should be limited. He suggested that the sponsor take this up
with [the co-chairs of the House Resources Standing Committee]
to decide whether to resolve it.
REPRESENTATIVE HOLM proposed adding a fiscal note.
REPRESENTATIVE ROKEBERG pointed out that if the decision is not
to add a fiscal note, then the scope of inquiry can be narrowed
to the feasibility. He suggested the sponsor work with Mr.
Heinze and DOR to ensure that everybody's "on the right page."
He said if it doesn't get fixed, it won't make it to the House
floor.
Number 2566
REPRESENTATIVE ROKEBERG moved to report HB 417 out of committee
with individual recommendations and the accompanying zero
"speculative" fiscal notes and footnotes.
REPRESENTATIVE HOLM asked if there was any objection.
REPRESENTATIVE CRAWFORD again registered reservations that
moving this forward might put the project at risk, although he
agreed with Representative Rokeberg that if the scope is limited
or funding is provided, perhaps this could be fixed. [In
response to Representative Rokeberg, he clarified immediately
after the adjournment was announced that he didn't object to
moving the bill out of committee.]
[There being no objection, HB 417 was reported from the House
Special Committee on Oil and Gas.]
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Oil and Gas meeting was adjourned at
4:15 p.m.
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