Legislature(2009 - 2010)Anch LIO Rm 220

12/15/2009 09:00 AM House RESOURCES


Download Mp3. <- Right click and save file as

Audio Topic
09:34:03 AM Start
09:34:16 AM Presentation: Alaska's In-state Gas
04:53:00 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Teleconference --
Alaska's In-State Gas
Presentations by Harry Noah, In-State
Gas Pipeline Coordinator, and key members
of Governor Parnell's administration
-- Testimony <Invitation Only> --
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                       Anchorage, Alaska                                                                                        
                       December 15, 2009                                                                                        
                           9:34 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Craig Johnson, Co-Chair                                                                                          
Representative Mark Neuman, Co-Chair                                                                                            
Representative Peggy Wilson                                                                                                     
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki (via teleconference)                                                                              
Representative Chris Tuck                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Bryce Edgmon                                                                                                     
Representative Kurt Olson                                                                                                       
Representative Paul Seaton                                                                                                      
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Representative Nancy Dahlstrom (via teleconference)                                                                             
Representative Les Gara                                                                                                         
Representative Carl Gatto                                                                                                       
Representative Kyle Johansen (via teleconference)                                                                               
Representative Jay Ramras                                                                                                       
Senator Charlie Huggins                                                                                                         
Senator Bert Stedman                                                                                                            
Senator Gary Stevens                                                                                                            
Senator Joe Thomas (via teleconference)                                                                                         
Senator Thomas Wagoner                                                                                                          
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION:  ALASKA'S IN-STATE GAS                                                                                            
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to report                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
HARRY NOAH, Project Manager                                                                                                     
In-State Gas Project                                                                                                            
Alaska Mental Health Trust Land Office                                                                                          
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION   STATEMENT:     Provided   a  PowerPoint   presentation                                                             
entitled, "Alaska In-State Gas Pipeline Project."                                                                               
                                                                                                                                
MIKE METZ, Consultant to the In-State Gas Project                                                                               
through Michael Baker Jr., Inc.                                                                                                 
Michael Baker Corporation                                                                                                       
(No address provided)                                                                                                           
POSITION  STATEMENT:     Assisted  Mr.  Noah   in  providing  the                                                             
PowerPoint presentation  entitled, "Alaska In-State  Gas Pipeline                                                               
Project."                                                                                                                       
                                                                                                                                
TOM IRWIN, Commissioner                                                                                                         
Department of Natural Resources (DNR)                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Provided  information and answered questions                                                             
in regard to Alaska's in-state gas.                                                                                             
                                                                                                                                
MARTY RUTHERFORD, Deputy Commissioner                                                                                           
Office of the Commissioner                                                                                                      
Department of Natural Resources (DNR)                                                                                           
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Answered questions  in regard  to Alaska's                                                             
in-state gas.                                                                                                                   
                                                                                                                                
JOHN REEVES, Special Assistant to the Commissioner                                                                              
Office of the Commissioner;                                                                                                     
Coordinator, Alaska Gas Pipeline Transportation Project                                                                         
Department of Transportation & Public Facilities (DOT&PF)                                                                       
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Provided  information and answered questions                                                             
in regard to Alaska's in-state gas.                                                                                             
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
9:34:03 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  MARK   NEUMAN  called  the  House   Resources  Standing                                                             
Committee meeting to  order at 9:34 a.m.  Present  at the call to                                                               
order were  Representatives Tuck, Kawasaki  (via teleconference),                                                               
Wilson,  Guttenberg,  Johnson, and  Neuman.    Also present  were                                                               
Representatives   Dahlstrom,    Gara,   Gatto,    Johansen   (via                                                               
teleconference),  and  Ramras,  and  Senators  Huggins,  Stedman,                                                               
Stevens, Thomas, and Wagoner.                                                                                                   
                                                                                                                                
^PRESENTATION:  ALASKA'S IN-STATE GAS                                                                                         
                                                                                                                                
9:34:16 AM                                                                                                                    
                                                                                                                                
CO-CHAIR NEUMAN announced  that the only order of  business is an                                                               
update on Alaska's in-state gas.                                                                                                
                                                                                                                                
9:36:18 AM                                                                                                                    
                                                                                                                                
HARRY NOAH, Project Manager, In-State  Gas Project, Alaska Mental                                                               
Health Trust Land Office, Department  of Natural Resources, began                                                               
his  PowerPoint presentation  by noting  that his  review of  the                                                               
status of the  In-State Gas Project will include a  report on the                                                               
work that has  been completed to date and an  outline of the work                                                               
remaining  to  be done  [slide  2].    He explained  the  state's                                                               
approach on this project is  to seek to encourage the development                                                               
of  an  in-state  gas  pipeline  by reducing  risk  to  a  future                                                               
pipeline developer (slide 3).                                                                                                   
                                                                                                                                
9:37:15 AM                                                                                                                    
                                                                                                                                
MR.  NOAH said  the state  began the  project by  identifying the                                                               
three legs of a stool for  reducing the risk to a future pipeline                                                               
developer (slide 4).  The first leg  was to define the costs.  An                                                               
engineering  study was  initiated to  look at  both the  pipeline                                                               
costs and the  facility costs, such as conditioning  on the North                                                               
Slope, gas  compressor stations,  and so forth.   The  second leg                                                               
was to acquire  the initial major permits, such as  the U.S. Army                                                               
Corps 404  permit and  the federal and  state right-of-way.   The                                                               
permitting process  has two parts:   1) the  environmental impact                                                               
statement  (EIS) process  and the  resolution  of the  conceptual                                                               
issues, and 2) the Notice to  Proceed (NTP) process where most of                                                               
the money  associated with the  permitting of a project  is spent                                                               
and  where the  detailed  engineering comes  in.   The  project's                                                               
intent was to  do the conceptual permits and get  through the EIS                                                               
process.                                                                                                                        
                                                                                                                                
9:39:29 AM                                                                                                                    
                                                                                                                                
MR.  NOAH,  in response  to  Co-Chair  Neuman,  said he  will  be                                                               
reviewing what has  been completed to date,  the specific costing                                                               
studies that are  ongoing, the permitting schedule  that has been                                                               
outlined by  the federal lead  agency, and suggestions for  a way                                                               
forward that he has as a 30-year resident of Alaska.                                                                            
                                                                                                                                
9:40:16 AM                                                                                                                    
                                                                                                                                
MR. NOAH resumed  his presentation, noting that the  third leg of                                                               
the  stool is  what  has  been identified  as  letters of  intent                                                               
between commercial entities - the  buyers and sellers of the gas.                                                               
A "commercial working group" was  put together to encourage those                                                               
groups to  work towards letters  of intent  to sell and  buy gas.                                                               
The vision  is to let the  market place decide whether  this is a                                                               
viable project  because that  is the  test here.   At the  end of                                                               
this process, it is possible  that those commercial entities will                                                               
come back saying  they are close but need some  help to close the                                                               
gap.  That  would then be the legislature's decision,  as that is                                                               
not part  of the work  effort that  this in-state gas  program is                                                               
progressing right now.                                                                                                          
                                                                                                                                
9:42:42 AM                                                                                                                    
                                                                                                                                
CO-CHAIR JOHNSON,  in regard  to allowing  the market  to decide,                                                               
asked whether there  has been a response yet  from the commercial                                                               
buyers and sellers.                                                                                                             
                                                                                                                                
MR. NOAH replied  yes.  He said that the  last commercial working                                                               
group meeting was attended by  everyone who could either sell gas                                                               
from the  North Slope  or buy  gas.  While  none of  the Railbelt                                                               
utilities   were  in   attendance,   the   meeting  did   include                                                               
representatives from  there.  It  is too early for  the utilities                                                               
to commit  and the project was  just at the point  of starting to                                                               
ask them to engage.  One  area being looked at for cost reduction                                                               
is gas  conditioning on the North  Slope.  He met  with the North                                                               
Slope producers to  ask whether there is a way  to integrate into                                                               
existing facilities  as much  as possible to  reduce the  cost of                                                               
gas  conditioning, and  each one  came back  individually to  say                                                               
their company would be happy to.                                                                                                
                                                                                                                                
MR. NOAH  said there is no  question in his mind,  that "Agrium,"                                                               
the  Railbelt utilities,  and to  a certain  extent, "Conoco"  in                                                               
terms of its LNG plant, are  interested in buying gas.  The price                                                               
is  the question,  and the  project has  not yet  gotten to  that                                                               
point.   The  project was  not  going to  be in  the business  of                                                               
predicting  the   total  commodity   price  because  that   is  a                                                               
commercial discussion  between those  two entities.   The project                                                               
was trying to focus on the cost of transport.                                                                                   
                                                                                                                                
MR. NOAH,  in further response  to Co-Chair Johnson,  stated that                                                               
there is so much politics in  Alaska right now that the situation                                                               
is  unattractive  for  those commercial  entities,  and  this  is                                                               
something  that  needs   to  be  sorted  through   somehow.    He                                                               
reiterated  that  the  project's  intent   was  to  make  this  a                                                               
commercial deal and let the  marketplace determine the timing and                                                               
the scope of whether this project is viable.                                                                                    
                                                                                                                                
9:46:21 AM                                                                                                                    
                                                                                                                                
MR.  NOAH  commenced  his presentation  by  describing  the  work                                                               
completed to  date (slide  5).   He said  the work,  studies, and                                                               
permit  applications  for  the alternative  routing  analysis  of                                                               
pipeline routes  have been completed  from south of  Fairbanks to                                                               
Cook Inlet  and are available  electronically and on paper.   Not                                                               
much difference was found between  a Richardson Highway route and                                                               
a Parks  Highway route, other  than the Richardson  Highway route                                                               
is  longer, which  equates to  about $500  million more  in cost.                                                               
The engineering  focus was  therefore put  on the  Parks Highway,                                                               
given the  goal is the  lowest cost project.   As a basis  of the                                                               
permitting process,  the project description was  next completed.                                                               
A detailed  project description is  currently underway  which, if                                                               
the project  continues, will be  sold by  the state as  an asset.                                                               
The engineering firm has reviewed  the ENSTAR Natural Gas Company                                                               
(ENSTAR)  capital cost  estimate  for the  pipeline.   The  major                                                               
permit applications have been prepared  and filed and the scoping                                                               
process  has started.   A  letter has  been sent  to the  Federal                                                               
Energy Regulatory  Commission (FERC) requesting  a jurisdictional                                                               
determination.   In  this letter,  the state  maintained that  it                                                               
does  not see  the in-state  gas pipeline  as regulated  by FERC.                                                               
Finally,  the  compressor  station  locations were  set  for  the                                                               
permitting process,  which means  the hydraulics of  the pipeline                                                               
have been done.                                                                                                                 
                                                                                                                                
9:49:15 AM                                                                                                                    
                                                                                                                                
MR. NOAH,  in response  to Co-Chair  Neuman, reiterated  that the                                                               
goal is not for the state  to build the project, but to encourage                                                               
some private  company in  the future  to build  the project.   He                                                               
said  the  state  is  therefore looking  at  four  scenarios  for                                                               
compressor stations:  250 million,  500 million, 750 million, and                                                               
1  billion  [standard  cubic  feet per  day  (scfd)],  with  each                                                               
scenario having  a different number  of compressor stations.   At                                                               
the lower  end, the engineering team  plans to look at  a smaller                                                               
diameter pipeline,  16-18 inches,  to see  what the  numbers are.                                                               
The base  case in general is  a 24-inch pipeline.   The intent is                                                               
simply to lay  the numbers out so everyone can  see them, thereby                                                               
making  it   a  transparent  process  both   for  the  commercial                                                               
community and the public.   The intent is not to  set a flow, but                                                               
to show  what the costs  are at different  levels of flow  in the                                                               
pipeline.                                                                                                                       
                                                                                                                                
9:50:38 AM                                                                                                                    
                                                                                                                                
CO-CHAIR NEUMAN noted that there has  been talk of a 48-inch pre-                                                               
build pipeline  going to Canada  and a smaller  diameter pipeline                                                               
going to Southcentral Alaska via  either the Parks Highway or the                                                               
Glenn  Highway.   He asked  whether the  In-State Gas  Project is                                                               
looking at this scenario.                                                                                                       
                                                                                                                                
MR. NOAH explained  that the engineering work being  done is like                                                               
an erector  set -  it can be  looked at in  terms of  segments or                                                               
size in order to answer questions  like this.  In addition to the                                                               
24-inch line,  engineers have looked at  what it would cost  if a                                                               
48-inch line  was built  to, say, Fairbanks,  and then  a 24-inch                                                               
line continued from there.  It  was found that this cost would be                                                               
roughly $2.5 billion  in addition to what it would  cost to build                                                               
a  24-inch  line  from  the  North Slope  to  Cook  Inlet.    The                                                               
assumption is that  everyone will be interested  in these various                                                               
numbers and how  they fit together, so the plan  is to have those                                                               
available.   A  route  to  Western Alaska  with  the endpoint  at                                                               
Donlin Creek Gold Mine is also  being looked at and those numbers                                                               
will be available as well.                                                                                                      
                                                                                                                                
9:53:17 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  JOHNSON  inquired  whether there  has  been  discussion                                                               
about a Point  Thomson take-off because that gas  is much cleaner                                                               
and  does not  need as  much conditioning,  thereby allowing  the                                                               
conditioning plant to be scaled down.                                                                                           
                                                                                                                                
MR. NOAH  responded it was felt  that to make the  project viable                                                               
there needed to  be focus on how  to have the least  cost for gas                                                               
conditioning  possible,  particularly  since  lower  flow  levels                                                               
might possibly require higher gas  conditioning levels (slide 6).                                                               
Prudhoe  Bay gas  has about  12 percent  more carbon  dioxide and                                                               
higher  hydrogen  sulfide, which  needs  to  be conditioned  out.                                                               
Therefore,  ideas in  the study  phase  include looking  at:   1)                                                               
integrating into  existing North  Slope facilities to  reduce the                                                               
cost,  and   2)  bringing   the  gas   to  Point   MacKenzie  and                                                               
conditioning it  there.   A "peaking plant"  would be  located in                                                               
the Fairbanks  area.  It is  unknown what the difference  is, but                                                               
that is one of the things being looked at.                                                                                      
                                                                                                                                
9:55:36 AM                                                                                                                    
                                                                                                                                
MR. NOAH  added that if  a methane-only gasline is  desired, then                                                               
the  Gubik gas  field would  be  a great  opportunity because  it                                                               
appears  that that  gas is  not high  in carbon  dioxide and  few                                                               
problems associated with it.   Right now it appears Point Thomson                                                               
is "sweet  gas."   A pipeline  route from  Point Thomson  to Pump                                                               
Station 2  has been looked at  by the project with  the idea that                                                               
it might be  a less expensive pipeline because it  would go along                                                               
the foothills higher  in the watershed and have  a shorter length                                                               
of river crossings.   The project assumed that  Point Thomson gas                                                               
could come over from Point Thomson  on the pipeline that is being                                                               
looked at right now by "Exxon."   He explained that this scenario                                                               
was looked  at because the  project was set  up with the  idea to                                                               
flow  gas in  2015  or early  2106, which  is  a very  aggressive                                                               
schedule.    It  would  be physically  impossible  to  meet  this                                                               
schedule if the  segment of pipeline between  where this pipeline                                                               
ends  and Point  Thomson were  left out  because that  would then                                                               
require another  environmental impact  statement (EIS).   He said                                                               
he cannot emphasize enough how aggressive the schedule is.                                                                      
                                                                                                                                
9:58:00 AM                                                                                                                    
                                                                                                                                
MR. NOAH,  in further response  to Co-Chair Johnson,  stated that                                                               
at this point in time  the [conditioning plant] costs are unknown                                                               
and the  purpose of  doing this  work is to  put together  all of                                                               
these costs so everyone can see them.   It gets to a point in any                                                               
of these projects where  it must be worked - it  is not a cookie-                                                               
cutter thing - there  must be striving to make it  work.  He said                                                               
he thinks  that at this point  [the conditioning plant] is  up to                                                               
the commercial working people and  is part of the discussion with                                                               
them.  The state  cannot go to the producer and  say "tell us how                                                               
to integrate  into your facility."   It has to be  a joint effort                                                               
at this point  in time and that is the  approach that the project                                                               
is trying to take.                                                                                                              
                                                                                                                                
9:59:29 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  JOHNSON asked  whether discussions  have occurred  with                                                               
"Exxon," the  leaseholder at Point Thomson,  about going directly                                                               
from Point Thomson to Pump Station 2.                                                                                           
                                                                                                                                
MR.  NOAH responded  yes.   The  last meeting  of the  commercial                                                               
working group  was about  six weeks  ago and  those conversations                                                               
were just  starting then, so the  discussions were hazy.   No one                                                               
said no and no one opposed taking a look at this.                                                                               
                                                                                                                                
10:00:47 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE GUTTENBERG inquired  whether the administration is                                                               
investigating an  alternative to  the commercial aspect  in which                                                               
the state  owns the pipeline and  builds it as a  public utility.                                                               
This would  be a way for  the state to guarantee  that the people                                                               
have reasonable rates, he opined.                                                                                               
                                                                                                                                
MR. NOAH  replied that the direction  he was given was  that this                                                               
would be  looked at  as a commercial  deal and he  was to  try to                                                               
make  it a  viable  commercial project.   At  some  point in  the                                                               
future the numbers  will be available and those  decisions can be                                                               
made  by  the  legislature  in consultation  with  the  governor.                                                               
Regardless of  whether the  state or  a private  developer builds                                                               
the pipeline,  there must be someone  that wants to sell  gas and                                                               
someone that  wants to buy  gas.  Therefore, the  same commercial                                                               
discussions must  go on to make  it work - letters  of intent are                                                               
still needed,  as are  all the things  outlined in  this program.                                                               
It is  too early to make  that decision and it  is an alternative                                                               
that  can be  dealt  with  at the  end  of  the process,  because                                                               
everything that  is currently  being done is  still needed  to be                                                               
able to make that decision.                                                                                                     
                                                                                                                                
10:03:43 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   GUTTENBERG  said   he   thinks  [a   state-owned                                                               
alternative] should be considered if  the state wants to continue                                                               
jump-starting  a pipeline  - the  Alaska  Gasline Inducement  Act                                                               
(AGIA) being  one such jump-start.   He said he thinks  the state                                                               
should   consider   the   benefits   that   investment   in   the                                                               
infrastructure will provide the  state; for example, reducing the                                                               
cost of energy  will be a huge advantage to  the state regardless                                                               
of the cost.  While he  appreciates Mr. Noah's answer, he said he                                                               
thinks there are a lot more  questions that should be answered at                                                               
this point rather than waiting.                                                                                                 
                                                                                                                                
10:05:07 AM                                                                                                                   
                                                                                                                                
MR.  NOAH returned  to  his presentation,  noting  that a  second                                                               
issue  to  come  out  of   the  project's  initial  work  is  the                                                               
marketability of  natural gas liquids  (NGL's) at  tidewater Cook                                                               
Inlet (slide  6).   One theory  is that if  the tariff  charge is                                                               
based  on the  British  Thermal Units  (BTU's) being  transported                                                               
rather than  just the flow,  the overall tariff could  be reduced                                                               
by moving  more BTU's down  the line.   That is  essentially what                                                               
"Exxon" and TransCanada are talking  about doing - moving as much                                                               
of the gas  liquids down to Alberta as possible  to make the line                                                               
work.   Essentially, one of  the ways to  deal with the  costs of                                                               
these  pipelines is  to  move  as much  liquids  as possible  and                                                               
literally  use the  methane just  as the  transport vehicle.   He                                                               
questions how much of the NGL's can  be sold and at what price if                                                               
they are at tidewater in Cook Inlet,  but this is an unknown.  It                                                               
makes sense to  say that the butane, propane,  and pentanes could                                                               
be  sold, but  that is  not  known and  is therefore  one of  the                                                               
things that has to be tested, and  that is one of the things that                                                               
the project originally had planned as part of this process.                                                                     
                                                                                                                                
10:06:40 AM                                                                                                                   
                                                                                                                                
CO-CHAIR  NEUMAN  noted  that  trying   to  reduce  energy  costs                                                               
throughout Alaska  is a  big issue.   The state  spends a  lot of                                                               
money in  assistance, he said,  and perhaps the  diesel generator                                                               
plants throughout  Alaska could be converted  to propane, thereby                                                               
using some of Alaska's resources  inside of Alaska to help reduce                                                               
costs.   He  offered his  understanding  that about  half of  the                                                               
liquids are  propane totaling about 12,000-15,000  barrels a day,                                                               
which is  way more than  the state could  use.  He  asked whether                                                               
any work  to reduce the costs  for in-state energy has  been done                                                               
by the In-State Gas Project,  given that propane's value is about                                                               
4-6 times higher  than that of methane.  In  addition, he opined,                                                               
this  would add  value  to Alaska's  resources  by creating  jobs                                                               
within the state and would reduce  the cost of that final flow of                                                               
methane  to  the nozzles  of  all  the furnaces  in  Southcentral                                                               
Alaska and elsewhere on the pipeline.                                                                                           
                                                                                                                                
10:08:03 AM                                                                                                                   
                                                                                                                                
MR. NOAH reiterated that he sees  this as a whole set of building                                                               
blocks.  For example, there needs  to be an understanding of what                                                               
it  will  cost  to  transport  the  gas  stream  to,  say,  Point                                                               
Mackenzie.   After that a determination  must be made as  to what                                                               
can be received  from selling the gas.  Once  this information is                                                               
known,  these other  different  things  can be  dealt  with.   He                                                               
advised that in moving gas from  the North Slope to Cook Inlet in                                                               
an in-state  gas pipeline, there are  only two ways to  drive the                                                               
cost  down:   1)  increase  the  volume  to the  greatest  extent                                                               
possible, or 2)  have the state subsidize it.   He explained that                                                               
the project  has taken  the approach  of looking  at what  can be                                                               
done  to make  this  commercially  viable, not  that  it was  the                                                               
project's  decision, but  just as  a  sort of  mechanics in  this                                                               
whole process  to determine what it  will cost, and then  let the                                                               
commercial   people  make   the  decisions   or  ultimately   the                                                               
legislature  may want  to make  decisions.   There are  a lot  of                                                               
things going  on here and until  the numbers are known  it is too                                                               
early to  deal with "here's what  the propane is going  to cost."                                                               
The  project cannot  say what  the cost  is going  to be  because                                                               
those  are commercial  discussions.   This  project  is just  the                                                               
mechanics, with  the idea being  to put the numbers  together and                                                               
encourage  the  commercial  people  to  make  agreements  amongst                                                               
themselves.                                                                                                                     
                                                                                                                                
10:10:08 AM                                                                                                                   
                                                                                                                                
CO-CHAIR NEUMAN surmised  that Mr. Noah's answer  to his question                                                               
is yes, the project is  looking at values, quantities, qualities,                                                               
and product that can be moved  down the pipeline to help with the                                                               
costs.                                                                                                                          
                                                                                                                                
MR. NOAH responded  that his project is looking at  what would be                                                               
available in terms of flow and  so forth, not what is the current                                                               
in-state market for propane.   The Alaska Natural Gas Development                                                               
Authority  (ANGDA) is  doing  that,  he said,  and  with so  many                                                               
people  in state  government spending  money on  all the  various                                                               
energy  issues  he did  not  see  any  need  for his  project  to                                                               
replicate those  things.  So, the  answer is that the  project is                                                               
not actually  looking at how  to market propane  in-state; rather                                                               
the project is looking at what it  would cost to get to Nenana or                                                               
Point MacKenzie.                                                                                                                
                                                                                                                                
CO-CHAIR  NEUMAN  agreed there  are  a  lot of  different  groups                                                               
working on  a lot  of different energy  issues within  the state.                                                               
They do not talk to each other either, he added.                                                                                
                                                                                                                                
10:11:05 AM                                                                                                                   
                                                                                                                                
CO-CHAIR JOHNSON  said he  sees the  state's expenditures  on the                                                               
various projects as the state's  involvement and participation in                                                               
a  pipeline,  possibly one  that  is  competitive with  the  AGIA                                                               
pipeline, that is  more than 0.5 billion standard  cubic feet per                                                               
day (Bscfd).   He asked whether the project has  discussed if its                                                               
work to date has subjected the  state to treble damages under the                                                               
AGIA contract.                                                                                                                  
                                                                                                                                
MR.  NOAH replied  that  the  intent of  his  project  is to  put                                                               
together a package  for the state to sell, and  the package would                                                               
include  an  engineering study  and  it  is  hoped it  will  also                                                               
include permits and  letters of intent.  The  project's intent is                                                               
to sell  that package for  about what it cost  to create it.   He                                                               
said it  has not been  his intent to get  into the middle  of the                                                               
AGIA  discussion.   Commissioner  Irwin  and Deputy  Commissioner                                                               
Rutherford  have a  well-thought-out  position  that the  project                                                               
should  be  careful  not  to  affect the  economics  of  the  big                                                               
pipeline.   Everyone wants a  big pipeline, there is  no downside                                                               
to  that  in  any  way.     This  question  must  be  dealt  with                                                               
technically and therefore the answer  is that the project has not                                                               
been having any  internal discussions about the  AGIA process and                                                               
triple  damages.    The  project  has  simply  been  a  group  of                                                               
mechanics  trying to  put together  a project  and providing  the                                                               
numbers.  The  project is not saying the pipeline  has to be more                                                               
than 500 million  standard cubic feet per day  (MMscfd).  Rather,                                                               
the project  is telling the  legislature that there are  two ways                                                               
to reduce the  cost of gas to  Cook Inlet - increase  the flow or                                                               
subsidize the  cost of the line  - and this is  not the project's                                                               
decision.   The  project is  just the  guys putting  together the                                                               
numbers.                                                                                                                        
                                                                                                                                
10:13:49 AM                                                                                                                   
                                                                                                                                
CO-CHAIR NEUMAN inquired  whether a third way to  reduce the cost                                                               
would  be to  put  down a  higher value  product  given that  the                                                               
project is looking at BTU's as  well as volume, which is quantity                                                               
and quality.                                                                                                                    
                                                                                                                                
MR.  NOAH answered  that if  NGL's could  be marketed  at a  good                                                               
profit from Cook  Inlet, then that would be true.   However, that                                                               
is currently unknown and is  therefore an outstanding question at                                                               
this point.   The reason it  makes sense to take  those NGL's to,                                                               
say, Calgary,  is that it  has an existing infrastructure  to buy                                                               
that, so there  is no question that those can  be used in Calgary                                                               
at this point  in time.  The question Alaska  must ask itself is,                                                               
What  is the  basis of  Alaska's economy?   Alaska  has a  lot of                                                               
policy decisions  that need to  be sorted  out, he opined.   They                                                               
are not  black or white,  right or wrong.   They just need  to be                                                               
sorted  out, and  this cannot  be done  without first  having the                                                               
numbers necessary to start the policy discussions.                                                                              
                                                                                                                                
10:15:28 AM                                                                                                                   
                                                                                                                                
MR. NOAH  returned to  his presentation  (slide 7)  and explained                                                               
that the  In-State Gas Project was  set up on a  schedule to move                                                               
gas in 2015 or 2016.  This  is a very aggressive schedule, so the                                                               
project came up  with internal milestones to do this.   The first                                                               
milestone is to  complete the basic cost of  transport numbers by                                                               
early summer 2010 so commercial  working people can see them and,                                                               
it  is hoped,  start discussions.    For the  coming budget,  the                                                               
project  has suggested  another  $6.5 or  $6.7  million, most  of                                                               
which is for  field work to gather basic engineering  data that a                                                               
company could  use to do  its detail design.   This data  will be                                                               
used to update  the cost of transport [in November  2010] as work                                                               
continues into the project description.   The lead federal agency                                                               
has come up  with a program to enable completion  of this initial                                                               
permitting  by   February  2011,  which  is   a  very  aggressive                                                               
schedule.   The  agency is  taking a  different approach  than it                                                               
normally does and the state needs  to applaud this effort.  It is                                                               
the project's intent to sell  the state package through a bidding                                                               
process that  is completed by April  2011; to do this  the intent                                                               
is to start the process of  finding a buyer in the fourth quarter                                                               
of 2010.   The internal  work plan is  being driven by  the 2015-                                                               
2016  end  date.   Energy  projects  are  so long-term  that  the                                                               
decisions made today  will affect everything in  2015, he pointed                                                               
out.   The legislature  must realize that  anything it  does that                                                               
slows this process down will delay the start-up.                                                                                
                                                                                                                                
10:18:41 AM                                                                                                                   
                                                                                                                                
MR. NOAH reviewed the detailed  schedule of permitting (slide 8),                                                               
noting  that  scoping  meetings  are  going  on  right  now.    A                                                               
contractor is  in place, and  the individual  permit applications                                                               
are available to anyone wishing a  copy.  When looking at an EIS,                                                               
it should  be realized that  a person walking the  pipeline route                                                               
would trip  over the numerous  stakes on  that route.   There are                                                               
already volumes of pages about these  routes, so it is hoped that                                                               
this is an EIS process  that can be completed relatively quickly.                                                               
While  people need  to  make  decisions, he  said  he thinks  the                                                               
issues are clear.  If this  were a project starting from the very                                                               
beginning it  would cost a  fortune, but  so much money  has been                                                               
spent prior  to this that  that information  can be used  to move                                                               
this project along in a timely manner.                                                                                          
                                                                                                                                
10:19:54 AM                                                                                                                   
                                                                                                                                
MIKE  METZ,  Consultant  to  the  In-State  Gas  Project  through                                                               
Michael Baker Jr., Inc., Michael  Baker Corporation, stated he is                                                               
the manager of right-of-way, Keith  Meyer (ph) is the engineering                                                               
manager,  and  Ward  Whitmore  (ph)  is  the  process  facilities                                                               
manager.  He said he will review the ongoing engineering plan.                                                                  
                                                                                                                                
10:20:27 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE GARA asked whether  his assumption is correct that                                                               
"the big  diameter pipeline"  would provide  cheaper gas  than an                                                               
in-state  pipeline,  and  an  in-state pipeline  is  if  the  big                                                               
pipeline does not go in time.                                                                                                   
                                                                                                                                
MR. NOAH answered "absolutely."                                                                                                 
                                                                                                                                
10:21:12 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  GARA  said  he  has  always  struggled  with  the                                                               
conundrum that  Fairbanks has  a more  immediate need  for energy                                                               
while  Anchorage is  trying to  figure out  where it  will get  a                                                               
source of  energy for its next  generation.  He asked  whether it                                                               
is  a  realistic  scenario  that  a pipeline  could  get  gas  to                                                               
Fairbanks  at cheaper  than what  Fairbanks is  currently paying,                                                               
but  it would  be  more  expensive gas  for  Anchorage than  what                                                               
Anchorage could  get from  elsewhere.   He further  asked whether                                                               
there is  an economical way  to get  natural gas to  Fairbanks to                                                               
help its  energy needs without  saddling Anchorage with  gas that                                                               
might be more expensive than gas from Cook Inlet or elsewhere.                                                                  
                                                                                                                                
10:22:14 AM                                                                                                                   
                                                                                                                                
MR. NOAH responded  that these questions are at the  heart of the                                                               
policy  decisions that  must  be made.   If  "the  big line"  was                                                               
coming along  in a timely  manner, there  is no question  that he                                                               
would say to  "stop all this."   The problem is that  there is no                                                               
way  to define  what that  schedule is.   If  these projects  are                                                               
worked on  for 20 years, the  circle just keeps going  around and                                                               
around in relation to "the big  line" as the enthusiasm builds up                                                               
only to then decide it is  not going to work once the engineering                                                               
is completed.   The  intent of  the In-State  Gas Project  was to                                                               
determine what  the cost would  be for  a project that  the state                                                               
can control.  The only  way that Fairbanks gets reasonably-priced                                                               
gas is  if a pipeline  is going by,  because the market  there is                                                               
not  big enough  to  sustain  a pipeline  coming  from the  south                                                               
unless the  state just wants to  buy it.  Also,  because there is                                                               
not a lot of natural gas  already there, people are not yet ready                                                               
to take the gas.  The  conundrum is what Representative Gara just                                                               
said - What  is the schedule for  "the big line?"   Also, at what                                                               
point in time does  the state say it is going to  move on?  There                                                               
is no question that the state  wants to encourage a big pipeline.                                                               
However, when  does the state  say it  must take care  of itself?                                                               
If  an assumption  is  made that  the  gas is  going  to be  more                                                               
expensive in Cook  Inlet because "the big line"  is coming along,                                                               
then what is being said is that  "the big line" is a given and it                                                               
is only  a question of  time; however,  he does not  know whether                                                               
that is true.                                                                                                                   
                                                                                                                                
10:24:54 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   GARA   said   the   answer   on   Fairbanks   is                                                               
disappointing  because the  ideal  circumstance would  be to  get                                                               
those people quick, cheap gas now.                                                                                              
                                                                                                                                
MR. NOAH  replied that  if there  is gas in  the Nenana  Basin it                                                               
will work great.                                                                                                                
                                                                                                                                
10:25:12 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE GARA said  he thinks the big prize  the state must                                                               
keep its  eye on is "the  big gasline," which means  the industry                                                               
and state must come together.   He expressed his concern that the                                                               
public may be  interpreting an in-state gasline  as meaning cheap                                                               
gas.  He  asked whether it is possible that  gas from an in-state                                                               
gasline might be at a low price.                                                                                                
                                                                                                                                
MR. NOAH  answered that he  thinks it  is possible, but  he would                                                               
need  to  know  a  number  so he  is  sure  he  understands  what                                                               
Representative Gara means.                                                                                                      
                                                                                                                                
REPRESENTATIVE  GARA  said  Anchorage  Municipal  Light  &  Power                                                               
(ML&P) had a great contract two years ago that was "below five."                                                                
                                                                                                                                
10:26:08 AM                                                                                                                   
                                                                                                                                
MR.  NOAH responded  that to  encourage development  of the  "LNG                                                               
plant" that  is most likely going  to shut down and  to encourage                                                               
redevelopment of  the "Agrium  plant," then  the gas  price could                                                               
not be  more than  about "nine  max" or  just slightly  less than                                                               
that.  To sell gas in-state  the North Slope producers must get a                                                               
return that is equal to, or  greater, than the return on gas that                                                               
goes  to the  Lower 48.   It  must be  a commercial  deal or  the                                                               
producers will  not do it.   With that  in mind, the  question is                                                               
whether the  tariff can be  driven down  enough to make  it work,                                                               
and that is the unanswered question  here.  It is not necessarily                                                               
true that  North Slope  gas is  going to be  expensive.   It gets                                                               
back to what he said earlier -  there must either be as much flow                                                               
through the pipeline as possible  or the state must subsidize it.                                                               
If  everything  is cut  in  half  because  of all  the  different                                                               
alternative energy and the gas  pipeline, then the energy will be                                                               
expensive.   The  market is  so  small that  most of  it must  be                                                               
captured for about 20 years to drive these costs down.                                                                          
                                                                                                                                
10:28:00 AM                                                                                                                   
                                                                                                                                
MR. METZ added  that without a large industrial  user the volumes                                                               
are pretty  small for just  the domestic  market.  To  saddle the                                                               
tariffs with  the capital  recovery would  drive the  prices very                                                               
high and that is why Mr. Noah is talking about subsidization.                                                                   
                                                                                                                                
MR. NOAH  clarified he  is only  saying that if  the flow  is not                                                               
allowed to go to the maximum demand.                                                                                            
                                                                                                                                
MR. METZ  pointed out  that then  the state  would have  to worry                                                               
about the limit of 500 billion cubic feet.                                                                                      
                                                                                                                                
MR. NOAH agreed.                                                                                                                
                                                                                                                                
10:28:48 AM                                                                                                                   
                                                                                                                                
SENATOR  HUGGINS  suggested  going  to the  Alaska  Oil  and  Gas                                                               
Conservation Commission (AOGCC) to ask  what the impacts would be                                                               
on the  fields and other  dynamics if  an offtake of  this amount                                                               
was begun this year.                                                                                                            
                                                                                                                                
MR. NOAH agreed  it would be useful to learn  from the AOGCC what                                                               
level of  offtake from the  field can be done  without destroying                                                               
the oil  reservoir.  This would  provide a data point  as part of                                                               
the policy discussion.                                                                                                          
                                                                                                                                
CO-CHAIR JOHNSON  said he sent a  letter on December 7,  2009, to                                                               
Commissioner  Irwin,  Department   of  Natural  Resources  (DNR),                                                               
asking the  department to request the  AOGCC to start a  study on                                                               
the allowable offtake.  He related  that he was told this request                                                               
must  come  from the  producers  or  the department  because  the                                                               
legislature does not have standing.                                                                                             
                                                                                                                                
10:30:59 AM                                                                                                                   
                                                                                                                                
MR.  METZ  began  his presentation  by  summarizing  the  ongoing                                                               
engineering work plan  for the next year (slide 9).   He said the                                                               
main purpose is to develop  cost of transport for various project                                                               
options.   The facilities are  being identified and  the pipeline                                                               
design is  being updated for further  cost estimate.  The  aim is                                                               
to increase the level of  confidence in the system cost estimates                                                               
by further defining both facilities  and pipeline design by doing                                                               
a  certain level  of  engineering on  the pipeline.    A cost  of                                                               
transport will be  done for the various scenarios  that have been                                                               
identified.  These have been  discussed with the commercial group                                                               
- the leaseholders, the sellers, and  the buyers - and some ideas                                                               
have been  developed, such as  processing in the Cook  Inlet area                                                               
or increasing  the amount of  NGL's and therefore  increasing the                                                               
BTU content  of the gas.   Documentation  of all of  the studies,                                                               
which  will be  transparent,  will then  be  provided to  parties                                                               
interested in developing a commercial project.                                                                                  
                                                                                                                                
10:33:04 AM                                                                                                                   
                                                                                                                                
MR. METZ,  in regard  to cost of  transport, explained  there are                                                               
two  phases of  development (slide  10).   In  early summer  2010                                                               
there will  be a  cost of  transport delivery  with the  focus on                                                               
facility costs,  such as for  NGL plants, saddle plants,  and the                                                               
gas conditioning facility.  Also  being incorporated into this is                                                               
the newly available  Legacy Data accessed through  the [state and                                                               
federal] Joint  Pipeline Office (JPO)  and the  Alaska Department                                                               
of Transportation  & Public Facilities  (DOT&PF).  In  late 2010,                                                               
there will again  be cost of transport delivery and  that will be                                                               
focused on  incorporating the field  program data  collected over                                                               
summer [2010] and an updating of the pipeline cost.                                                                             
                                                                                                                                
10:34:08 AM                                                                                                                   
                                                                                                                                
MR. METZ  said work to-date  has identified four  basic scenarios                                                               
(slide 11).  All the scenarios  start with the use of residue gas                                                               
which has  a lower NGL content.   The first scenario  is [Central                                                               
Gas   Facility  (CGF)]   residue  gas   only,  North   Slope  gas                                                               
conditioning,  and  extraction  at  Cook Inlet  of  the  NGL's  -                                                               
propane,  butane, and  methane.   The  second  scenario is  [CGF]                                                               
residue  gas  only  with  Cook Inlet  gas  conditioning  and  NGL                                                               
extraction at a combined tidewater  plant.  The third scenario is                                                               
[CGF]  residue   gas  with  North  Slope   conditioning  and  NGL                                                               
extraction.  This scenario has two  variations:  1) all the NGL's                                                               
are given  back to the unit  with only methane exported  from the                                                               
North Slope  or, 2)  preferential export of  propane on  the line                                                               
without the  ethane, which is  the base case that  the commercial                                                               
team  wanted to  look at  and  therefore is  still being  carried                                                               
forward.   The fourth scenario  is [CGF] residue gas  spiked with                                                               
the [CGF]  stabilizer overhead  gas which is  rich in  NGL, North                                                               
Slope gas  conditioning, and Cook Inlet  NGL extraction, provided                                                               
there is a  market for the NGL's.   Each of these  four cases has                                                               
four flow scenarios:   250, 500, 750, and  1000 [million standard                                                               
cubic feet  per day (MMscfd)].   Thus, the project is  looking at                                                               
16 different cases.   By developing the facilities  costs like an                                                               
erector set - piece by piece  - the various costs can be combined                                                               
into each scenario.                                                                                                             
                                                                                                                                
10:36:46 AM                                                                                                                   
                                                                                                                                
CO-CHAIR NEUMAN  surmised that each  of the four  scenarios would                                                               
have a  direct effect  on the  end cost  of methane  delivered to                                                               
homes throughout Southcentral Alaska.   He asked whether that end                                                               
cost would be determined as part of this process.                                                                               
                                                                                                                                
MR. METZ replied yes, definitely.   The project will come up with                                                               
a list  of various scenarios  and the costs associated  with each                                                               
so  that  the  list  can  then   be  pulled  down  and  the  best                                                               
opportunities looked at in more detail.                                                                                         
                                                                                                                                
10:37:32 AM                                                                                                                   
                                                                                                                                
CO-CHAIR JOHNSON presumed  that CGF stabilizer overhead  gas is a                                                               
richer gas.                                                                                                                     
                                                                                                                                
MR. METZ answered yes.                                                                                                          
                                                                                                                                
CO-CHAIR JOHNSON  asked whether it  is necessary to  process that                                                               
on the North Slope or could it be processed at Cook Inlet.                                                                      
                                                                                                                                
MR. METZ  said the  process team  is looking  at that  right now.                                                               
The  stabilizer overhead  has high  NGL content  as well  as high                                                               
carbon dioxide  content, so the team  is looking to see  how that                                                               
might be  blended.   At the  present time,  the team  is trending                                                               
toward North Slope conditioning.                                                                                                
                                                                                                                                
CO-CHAIR JOHNSON  inquired whether anyone is  currently doing NGL                                                               
extraction and conditioning at the  same time, which would garner                                                               
the benefit of the same site, same building, and same permit.                                                                   
                                                                                                                                
MR. METZ responded yes,  that can be done.  The  NGL portion is a                                                               
separate plant, but it can be incorporated into the same site.                                                                  
                                                                                                                                
10:38:52 AM                                                                                                                   
                                                                                                                                
CO-CHAIR  JOHNSON  asked  whether  the carbon  dioxide  could  be                                                               
injected into Cook Inlet wells to  get more oil production if the                                                               
extraction and conditioning were done at Cook Inlet.                                                                            
                                                                                                                                
MR.  METZ replied  that this  is being  looked at  and there  are                                                               
several fields in  the Cook Inlet that could take  that amount of                                                               
carbon dioxide.                                                                                                                 
                                                                                                                                
CO-CHAIR JOHNSON  inquired whether  this injection  would enhance                                                               
oil production.                                                                                                                 
                                                                                                                                
MR. METZ  answered he does  not know very  much about the  use of                                                               
carbon dioxide in  Cook Inlet because no carbon  dioxide has been                                                               
available there  and so it has  not been thought about  much.  In                                                               
further response, he agreed it is a good thought.                                                                               
                                                                                                                                
10:39:54 AM                                                                                                                   
                                                                                                                                
CO-CHAIR   NEUMAN  noted   that   the  aforementioned   scenarios                                                               
represent quite a  few jobs that would be done  in Alaska, so the                                                               
legislature must look  at that along with looking  at the effects                                                               
on the state's general fund revenue.                                                                                            
                                                                                                                                
MR. METZ responded that the  project's job is to give legislators                                                               
the pieces  so they  can be  combined in various  ways to  get an                                                               
idea of what the cost of transport would be.                                                                                    
                                                                                                                                
10:41:03 AM                                                                                                                   
                                                                                                                                
MR.  METZ  explained  that the  project's  facilities  work  plan                                                               
focuses on  the development of  schematic flow diagrams  and cost                                                               
estimates for each of the  components of a gas conditioning plant                                                               
(slide 12).   These will  probably be looked  at in units  of 250                                                               
[MMscfd] so that  they could be combined into 500,  750, and 1000                                                               
[MMscfd].    Process flow  simulations  are  being developed  and                                                               
process flow  diagrams are being  generated with  major equipment                                                               
for estimating the  cost.  Therefore, the cost  estimate is being                                                               
done  by each  component; in  other words,  the NGL  component is                                                               
going to be  different from the gas conditioning  component.  So,                                                               
the   conditioning  trains,   the   NGL  trains,   and  the   NGL                                                               
fractionation and storage are being looked at.                                                                                  
                                                                                                                                
MR. METZ stated that on  the pipeline work plan, investigation on                                                               
cost reduction opportunities  is continuing (slide 13).   A field                                                               
verification investigation will be  conducted, which will include                                                               
boots  on  the  ground  and  drilling.   Development  of  a  more                                                               
detailed design basis  for the pipeline is  currently being done.                                                               
More  detailed  design criteria  and  procedures  related to  the                                                               
design of  the line will also  be prepared so that  the costs can                                                               
be  better   defined.     All  of  this   will  be   rolled  into                                                               
documentation that will be available.                                                                                           
                                                                                                                                
10:43:01 AM                                                                                                                   
                                                                                                                                
MR. METZ  explained that in  the investigation of  cost reduction                                                               
opportunities (slide  14), the project  is trying to  improve the                                                               
route constructability.   A lot  of studies have been  done north                                                               
of  Livengood,  so there  is  a  good  idea from  those  previous                                                               
studies as to  where that best route is  located; additional work                                                               
still needs  to be done  south of  Livengood.  There  is constant                                                               
looking  at differences  in how  the  line might  be designed  to                                                               
optimize  pipeline  hydraulics.    Length  reductions  are  being                                                               
looked  at and  reroute recommendations  were recently  made that                                                               
would reduce  some length.   Also being investigated are  ways to                                                               
reduce   right-of-way    preparation   and    reclamation   work.                                                               
Additionally,  a   study  is   being  conducted   to  investigate                                                               
replacing  compressor  station  refrigeration with  air  coolers.                                                               
The  hydraulics work  has indicated  there may  not be  very much                                                               
benefit from  the refrigeration and  perhaps the location  of the                                                               
compressor  stations  can  be optimized  to  use  natural  ground                                                               
cooling combined  with air coolers for  cooling the gas.   All of                                                               
this  is   pointing  to   a  refined   mile-by-mile  geotechnical                                                               
characterization  of  the  pipeline,  which is  needed  to  apply                                                               
design procedures and come up with a better cost estimate.                                                                      
                                                                                                                                
10:44:41 AM                                                                                                                   
                                                                                                                                
MR.  METZ   reviewed  the  field  investigations   that  will  be                                                               
undertaken (slide 15).  These  include river crossing assessments                                                               
and verification of  the crossings, especially some  of the major                                                               
crossings.   A geotechnical borehole  program is being  worked on                                                               
with  the  Department  of   Transportation  &  Public  Facilities                                                               
(DOT&PF).    A   material  site  program  is   being  started  in                                                               
collaboration  with  DOT&PF  which  will  include  assessment  of                                                               
current  sites and  the identification  and  verification of  new                                                               
sites, especially north of Livengood.   The initial work has been                                                               
done  on characterizing  active fault  crossings.   Some of  that                                                               
work needs  to be finalized so  it is known exactly  where in the                                                               
field  these  are   located  and  what  amount   of  movement  is                                                               
anticipated.   An additional constructability assessment  will be                                                               
done with  boots on  the ground  to look at  the route  to ensure                                                               
optimization  of cross-slope  approaches to  steep slopes  and so                                                               
forth.  As  part of the logistics update there  will be a program                                                               
where the  roads, access  roads, camps,  and storage  yards along                                                               
the route are characterized.                                                                                                    
                                                                                                                                
10:46:09 AM                                                                                                                   
                                                                                                                                
CO-CHAIR  NEUMAN understood  that the  people of  Denali National                                                               
Park &  Preserve would love to  have the natural gas,  as opposed                                                               
to the diesel currently being  used, should the pipeline route be                                                               
along the Parks Highway.                                                                                                        
                                                                                                                                
MR.  NOAH identified  two possible  routes  near the  park:   one                                                               
going right  down the  highway in  the ditch  and one  going just                                                               
outside the park across the river  and along the bench.  The cost                                                               
of both routes is about the  same; however, the route through the                                                               
park  would get  tied  up  in Title  11  of  the Alaska  National                                                               
Interest Lands Conservation Act (ANILCA).   Under Title 11 an EIS                                                               
would  need  to be  done  and  approval  received from  the  U.S.                                                               
Secretary of the Interior, the  President, and Congress.  Senator                                                               
Lisa Murkowski  introduced a bill  that would allow  the National                                                               
Park  Service  to  make  the  decision and  avoid  the  Title  11                                                               
process.   The project told the  park service to work  things out                                                               
if  it wants  the  line through  the park,  but  the project  has                                                               
applied for the route going around the park.                                                                                    
                                                                                                                                
10:47:59 AM                                                                                                                   
                                                                                                                                
MR.  METZ  discussed project  documentation  over  the next  year                                                               
(slide 16).   The  design basis will  be formally  documented, as                                                               
will  the   design  criteria  and  procedures.     The  technical                                                               
description  of the  pipeline and  facilities  will be  detailed.                                                               
The construction  and logistics  plan will be  updated and  a new                                                               
cost  estimate provided  for the  pipeline.   That cost  estimate                                                               
will build on the original one  that was done by ENSTAR, which is                                                               
a  very detailed  cost  estimate.   It  is  anticipated that  two                                                               
different  groups  will  work  on it  independently  and  then  a                                                               
comparison of  the cost  estimates will  be made at  the end.   A                                                               
detailed alignment  sheet series  will be issued  and it  will be                                                               
all geographic  information system (GIS).   The GIS  is currently                                                               
up  and  running, and  the  Legacy  Data and  additional  digital                                                               
elevation  modeling  (DEM) data  are  still  being put  into  it.                                                               
Applications to  that are being  written to help in  defining and                                                               
characterizing the route.                                                                                                       
                                                                                                                                
10:49:39 AM                                                                                                                   
                                                                                                                                
MR. METZ, in  response to Co-Chair Neuman, explained  that GIS is                                                               
the geographical  information system,  which provides  a platform                                                               
for putting  real-world coordinates  on all  the facilities.   It                                                               
allows  information  from   a  variety  of  sources   -  such  as                                                               
topographic maps,  digital elevation models, and  Light Detection                                                               
And Ranging (LIDAR) data - to  be combined which allows the rapid                                                               
evaluation of alternatives.                                                                                                     
                                                                                                                                
10:50:49 AM                                                                                                                   
                                                                                                                                
MR. NOAH outlined  the issues facing Alaska (slide 17).   He said                                                               
that  in the  next  10 years  the economy  of  Alaska may  change                                                               
dramatically  due to  (declining) flow  through the  Trans-Alaska                                                               
Pipeline System  (TAPS) and loss  of federal dollars.   Right now                                                               
there  really  is  no long-term,  affordable  energy  source  for                                                               
Fairbanks, the Railbelt, and Western  Alaska.  While there is gas                                                               
in  Cook Inlet,  the big  bubble of  gas is  no longer  there and                                                               
there  will  likely  always  be  the one  to  three  year  supply                                                               
scenario versus demand in Cook Inlet.                                                                                           
                                                                                                                                
10:52:02 AM                                                                                                                   
                                                                                                                                
MR. NOAH addressed  a diagram showing the  current energy tug-of-                                                               
war going on  in the state (slide 18).   He described the diagram                                                               
as  being a  circle with  numerous ropes  [projects] pulling  out                                                               
from that  circle.  Inside  the circle are  a major gas  sale off                                                               
the  North Slope  and  an  in-state energy  supply.    No one  is                                                               
together  because  all  the different  projects  are  pulling  in                                                               
different directions,  and one project  wants to kill  the other.                                                               
Everyone wants the  same thing and wants to do  what is right for                                                               
Alaska, but  no one can  figure out why  the others do  not agree                                                               
with his or her plan.  All  kinds of energy are included in these                                                               
various projects,  but nothing  is moving forward.   There  is no                                                               
major  sale  off the  North  Slope  and  no  gas supply.    Until                                                               
everyone gets together it is just  a thrashing of each other, and                                                               
the legislature is  funding most of this.  It  can be argued that                                                               
up to  this point the  dollars have been  well spent; but  if the                                                               
spending continues  and no one  makes a decision, civil  war will                                                               
be  created within  state government  and there  is no  profit in                                                               
that.  What is happening right now is not positive, he opined.                                                                  
                                                                                                                                
10:54:03 AM                                                                                                                   
                                                                                                                                
CO-CHAIR NEUMAN agreed, but said he  does not want to get too far                                                               
into this because the legislature is aware of this.                                                                             
                                                                                                                                
MR. NOAH  allowed that he  is as guilty as  anyone else -  he got                                                               
tired of the  argument and just stopped talking to  people; so he                                                               
is  not saying  he is  right  and everyone  else is  wrong.   The                                                               
problem  is that  the state  is not  advancing and  it is  at the                                                               
point  where the  politicians and  leaders of  the state  need to                                                               
sort things  out.  The  decisions are hard  and he would  like to                                                               
make some suggestions.                                                                                                          
                                                                                                                                
10:55:51 AM                                                                                                                   
                                                                                                                                
MR. NOAH  noted that a  lot of time and  money has been  spent by                                                               
the  legislature  working  toward  the open  season  (slide  20).                                                               
Everyone wants  it to  work, but if  some underlying  factors are                                                               
not dealt with, the open  season will be mush and non-conclusive.                                                               
Is the  state going to deal  with the issue of  fiscal certainty?                                                               
There is no law that says  this must be done, but the fundamental                                                               
question being asked  by the producers is whether  the state will                                                               
grab  hold of  the  gasline  and suck  it  dry  from a  financial                                                               
standpoint  should the  oil  pipeline  run out.    While this  is                                                               
political dynamite right  now, it must be dealt with  or else the                                                               
open  season  will be  heavily  conditioned  and will  just  keep                                                               
rolling from one year to the next.                                                                                              
                                                                                                                                
10:57:23 AM                                                                                                                   
                                                                                                                                
MR.  NOAH said  his first  suggestion, which  may be  politically                                                               
impossible given  that everyone  is running  for office,  is that                                                               
some  basic  conclusions  must   be  made  about  whether  fiscal                                                               
certainty is going to be dealt  with so the chances for this open                                                               
season can  be improved.  To  say that it does  not mean anything                                                               
if the  open season does not  work is incorrect.   The state must                                                               
take care  of itself  in terms  of these  economic issues  and in                                                               
terms of energy supply.                                                                                                         
                                                                                                                                
MR. NOAH  noted that  the schedule TransCanada  has right  now is                                                               
that if everything  goes well on this open season,  a decision on                                                               
whether to go forward with the  pipeline will be made by November                                                               
2014.    He said  it  is  perfectly  reasonable from  a  business                                                               
standpoint to get an open  season, deal with the fiscal certainty                                                               
issue at some point in time,  get FERC and all the permitting and                                                               
stipulations that are  cost items out of the way,  figure out the                                                               
First Nations issue, and then  do a feasibility study and decide.                                                               
However,  the question  is  whether  it is  in  the state's  best                                                               
interest to wait that long when  there is no assurance that there                                                               
is  going to  be  a pipeline.    That  has to  be  answered.   If                                                               
everything keeps floating like the way  it is now, the state does                                                               
not get  to any answers.   The state  is coming up  with numbers,                                                               
but  not putting  everything into  context and  coming up  with a                                                               
plan that allows this to move forward.                                                                                          
                                                                                                                                
10:59:29 AM                                                                                                                   
                                                                                                                                
MR.  NOAH pointed  out  that the  state is  also  working on  the                                                               
concept of having  50 percent of its energy be  renewable by 2025                                                               
(slide  21).   While there  is no  argument that  this is  a good                                                               
idea, the market is small and there  is only so much demand.  The                                                               
state  must  therefore rectify  at  this  point in  time  whether                                                               
renewable  energy makes  sense.   The  state  must determine  its                                                               
backup plan,  but it must  sort out whether  the plan is  to fund                                                               
renewable  energy or  an in-state  gas  pipeline because  funding                                                               
both of  these is distorting  and confusing the marketplace.   On                                                               
one hand  the state wants  people to  come in commercially  to do                                                               
things, but  on the other hand  there is a hammer  that the state                                                               
may  decide  to  do  these  things  itself,  which  confuses  the                                                               
marketplace.     "You,  the  politicians,   need  to   make  some                                                               
decisions,"   he   said.     The   first   question  is   whether                                                               
[politicians] are  going to deal  with fiscal  certainty because,                                                               
if not, that  means the pipeline is going to  be delayed for some                                                               
period of time.  The  other question is whether [politicians] are                                                               
going to  fund renewable  energy and, if  not, that  answers that                                                               
question because that  is going to be more  expensive energy than                                                               
energy that comes from an in-state gas pipeline.                                                                                
                                                                                                                                
11:01:25 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  RAMRAS  referred  to  slide 18  as  a  means  for                                                               
talking  about some  of the  potential commercial  users for  gas                                                               
that would create  jobs for Alaskans, revenue for  the state, and                                                               
opportunity  for different  regions.   He  named some  industrial                                                               
anchors that  could be substituted  in the boxes  surrounding the                                                               
circle  in the  diagram:   "Donlin,  Pebble, International  Tower                                                               
Hill,  restarting  Agrium,  continuing   the  Conoco  LNG  export                                                               
facility," as well as a gas-to-liquids  plant.  He asked Mr. Noah                                                               
to   discuss  how   in-state  gas   would   integrate  into   the                                                               
aforementioned  industrial  use  and what  the  potential  volume                                                               
could be for an in-state line.   He agreed with Mr. Noah that the                                                               
uncertainty of whether  "a large line" will be  built on schedule                                                               
tends  to push  back the  likelihood that  the state  can proceed                                                               
with real resource development in Alaska.                                                                                       
                                                                                                                                
11:04:57 AM                                                                                                                   
                                                                                                                                
MR.  NOAH   responded  that  continuance  of   the  existing  big                                                               
industrial users will require an  investment around the magnitude                                                               
of $100  million.  The "LNG  plant" coming on at  full production                                                               
would require  about 300  million [standard  cubic feet]  per day                                                               
and  the "Agrium"  plant would  use about  160 million  [standard                                                               
cubic feet] per  day, for a total of about  460 million [standard                                                               
cubic feet].   Railbelt  electrical demand  is about  110 million                                                               
[standard  cubic  feet],  and  the ENSTAR  demand  is  about  100                                                               
million  [standard  cubic  feet].     The  potential  demand  for                                                               
Fairbanks would  be about  30 million  [standard cubic  feet] per                                                               
day, although that demand does not  exist today.  If Donlin Creek                                                               
Gold  Mine  went  on  line  and  if the  mine  used  gas  in  its                                                               
equipment,  the use  would be  about 33  million [standard  cubic                                                               
feet] per day.   He said he  has heard a number  of scenarios for                                                               
the  Pebble  Mine ranging  from  80-150  million [standard  cubic                                                               
feet] per day.   He noted that if gas  was brought from somewhere                                                               
near  Nenana to  the Donlin  Creek Gold  Mine, it  could then  be                                                               
brought around  the back side  and around through Bristol  Bay to                                                               
the  Pebble  Mine.    While  all  of  Western  Alaska  would  not                                                               
necessarily have gas,  the gas could be used for  power plants to                                                               
electrify the area.                                                                                                             
                                                                                                                                
11:07:29 AM                                                                                                                   
                                                                                                                                
MR. NOAH  further pointed  out that bringing  gas from  Nenana to                                                               
Donlin  Creek Gold  Mine could  be  done by  possibly building  a                                                               
seasonal road, which  would change the economics  for both Donlin                                                               
and the people living out there  because the winter road could be                                                               
used.   This  area has  major  mineralization, much  of which  is                                                               
gold,  so this  area  may  have more  potential  than the  Ambler                                                               
district.  If, say, $5 billion  is spent for an in-state pipeline                                                               
and, say, at  a guess, $600 million  is spent to build  a line to                                                               
Donlin Creek  Gold Mine,  the Donlin gold  is worth  $4.5 billion                                                               
and 800  jobs for  20 years.   Spending  $100 million  to upgrade                                                               
both  the "Agrium"  and "LNG"  plants would  bring back  the jobs                                                               
that were there.                                                                                                                
                                                                                                                                
11:09:35 AM                                                                                                                   
                                                                                                                                
MR.  NOAH  advised  that  while  a  "big  pipeline"  will  create                                                               
economic  activity,  an  in-state  line  will  create  a  lot  of                                                               
economic activity  between 2013  and 2018,  a time  period during                                                               
which  there is  a  real  potential for  economic  decline.   The                                                               
decisions that  legislators make now will  have a lot to  do with                                                               
how the  state's economy  looks in the  future; if  decisions are                                                               
put off  because they are  too hard or  politically unacceptable,                                                               
everything will just  keep on moving out from where  the state is                                                               
right now.                                                                                                                      
                                                                                                                                
CO-CHAIR NEUMAN agreed  and said that to him this  is a statewide                                                               
energy plan.                                                                                                                    
                                                                                                                                
11:10:55 AM                                                                                                                   
                                                                                                                                
MR. NOAH, in  response to Co-Chair Johnson, said  the natural gas                                                               
total demand  that he  cited for  Representative Ramras  would be                                                               
about  [670] MMscfd  in demand,  with about  [63] MMscfd  in real                                                               
potential  demand because  Pebble cannot  yet be  considered real                                                               
potential demand.                                                                                                               
                                                                                                                                
11:11:32 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  RAMRAS said  he would  like to  get a  number for                                                               
what  it would  mean to  the state  treasury in  royalties, given                                                               
that the state  would get a royalty from both  the "big pipeline"                                                               
as well as an in-state line.  He  would also like to know what it                                                               
would mean  for the aggregate  of jobs, electrifying  other parts                                                               
of the  state, and gasifying  Fairbanks.  He asked  whether there                                                               
is a number for the valuation  of the "Agrium plant."  He offered                                                               
his understanding that it would  cost about $3 billion to replace                                                               
that  plant and  that  the Chinese  government  is talking  about                                                               
dismantling the plant  and reconstructing it across  the ocean in                                                               
another country.                                                                                                                
                                                                                                                                
11:13:23 AM                                                                                                                   
                                                                                                                                
MR. NOAH  replied that while he  gave numbers, Cook Inlet  is not                                                               
going  to magically  stop producing  gas.   It cannot  be assumed                                                               
that all  of [the gas supply]  will come from one  source such as                                                               
the North  Slope, and he  does not know  right now how  those two                                                               
feather together.   He said he  does not know the  in-place value                                                               
of the  "Agrium plant"  and the  only decision  he has  been told                                                               
about  is that  the plant  will not  be scrapped  or pieced  out;                                                               
however, discussions  are occurring  with the  Chinese government                                                               
to pick  up that plant.   He said  he thinks the  assumption that                                                               
the plant's owners  are not interested in  re-starting that plant                                                               
is incorrect.  He said he also  does not think it is correct that                                                               
the plant  would have to have  "$2 gas" anymore to  make it work,                                                               
although he does  not know right now what that  number would need                                                               
to be to make  it work.  That is part of the  work his project is                                                               
trying to do, he added.                                                                                                         
                                                                                                                                
11:15:33 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE RAMRAS recalled a visit  to the U.S. Department of                                                               
Energy's Office  of Fossil Energy  in Washington, D.C.,  in April                                                               
2009 where  it was discussed how  difficult it is to  get permits                                                               
to export natural gas.  He  related that Alaska has achieved "old                                                               
partner trading  status" with  Japan and  has been  exporting gas                                                               
for 40 years out of the  "Kenai LNG plant," which presently has a                                                               
license  to  export  up  to  100 billion  cubic  feet  per  year.                                                               
However, he said  that this year, due to how  distressed the Cook                                                               
Inlet  is, that  number is  likely to  be in  the low  20's.   He                                                               
recounted a  recent visit  with the  [Kenai] plant  supervisor in                                                               
which he  was told employees  are concerned about their  jobs and                                                               
the plant's viability in the market.   He asked how Mr. Noah sees                                                               
things going for this facility.                                                                                                 
                                                                                                                                
11:16:41 AM                                                                                                                   
                                                                                                                                
MR. NOAH  answered that the plant  will have to renew  its export                                                               
license if  it is  going to  continue to operate  and there  is a                                                               
sense that  the plant will  not be able to  renew it.   This gets                                                               
back to the politics  of Alaska.  Decisions need to  be made.  If                                                               
Alaska does not  want these plants, all it has  to do is nothing,                                                               
and they  will go away.   But, if  Alaska wants them  to operate,                                                               
then  the state  must make  some effort.   Alaska  probably needs                                                               
them more  than they  need Alaska.   Alaska has  been rich  for a                                                               
long time, but  now Alaska is about to  be not so rich.   It is a                                                               
shame to  let these folks  go, he opined.   Decisions need  to be                                                               
made as  to whether [legislators]  are going  to try to  make the                                                               
open  season work  and whether  renewable energy  is going  to be                                                               
funded.  And,  if [legislators] do not want to  do that, are they                                                               
willing to let the marketplace  decide whether these in-state gas                                                               
projects will work  or not?  The state has  itself wrapped around                                                               
the axle with all these different  things right now and they need                                                               
to be  sorted out.  He  said, "It's the politicians  that have to                                                               
sort it  out, because quite  honestly you  are the guys  that are                                                               
creating  the issue;  you're funding  all these  different things                                                               
... time to make some decisions."                                                                                               
                                                                                                                                
11:18:49 AM                                                                                                                   
                                                                                                                                
SENATOR WAGONER supported the re-opening  of "Agrium" and keeping                                                               
"ConocoPhillips"  operating.    He   inquired  whether  there  is                                                               
documentation from Agrium stating  its willingness to participate                                                               
in an  in-state gasline if  it could receive a  particular amount                                                               
of  gas  at  a particular  price  and  additional  deliverability                                                               
agreements to have  that gas delivered for 10 years.   He related                                                               
that one Agrium  representative has told him there is  no way the                                                               
plant would be re-opened without those guarantees.                                                                              
                                                                                                                                
11:19:46 AM                                                                                                                   
                                                                                                                                
MR. NOAH confirmed  that this has been expressed to  him as well,                                                               
and  that "Agrium"  would prefer  20 years  versus 10.   This  is                                                               
exactly the process the project  has been going through, he said.                                                               
Everybody needs the numbers to make  a decision.  This is why the                                                               
commercial working group was put  together and the purpose of the                                                               
letters of  intent.  If  the project  has the cost,  the permits,                                                               
and  the  letters  of  intent  in  hand,  then  that  is  a  very                                                               
interesting  package for  a pipeline  developer; but  the project                                                               
just has not  gotten there yet.  The in-state  program is exactly                                                               
what  Senator Wagoner  has described  and he  thinks there  is an                                                               
interest if  the numbers work.   It may be that  the project gets                                                               
to  the end  of the  process  and the  numbers do  not quite  fit                                                               
together, in which case the state  may have to come forth and ask                                                               
what needs to be done to  close the gap.  However, he reiterated,                                                               
this process is not there yet.                                                                                                  
                                                                                                                                
11:21:24 AM                                                                                                                   
                                                                                                                                
SENATOR HUGGINS recalled that Mr.  Noah was once the commissioner                                                               
of the Department of Natural Resources.                                                                                         
                                                                                                                                
MR. NOAH replied yes.                                                                                                           
                                                                                                                                
SENATOR  HUGGINS  understood  that  when  Mr.  Noah  entered  his                                                               
present  capacity for  in-state  gas  he had  stated  he was  not                                                               
interested in politics and wanted to do a project, not a report.                                                                
                                                                                                                                
MR. NOAH answered yes.                                                                                                          
                                                                                                                                
11:21:53 AM                                                                                                                   
                                                                                                                                
SENATOR HUGGINS continued,  saying it seems to him  that Mr. Noah                                                               
is a victim  of the civil war mentioned earlier.   He offered his                                                               
apologies.    He  related  that  when Mr.  Noah  took  this  job,                                                               
legislators  had   great  expectation   based  upon   Mr.  Noah's                                                               
capability, enthusiasm,  and reputation for getting  things done.                                                               
It appears  [legislators] have derailed this  process, he opined,                                                               
because Mr. Noah  will be gone come January 2010  and someone new                                                               
will  be there.   Every  time leadership  changes it  sets things                                                               
back, and as was said earlier  by Mr. Noah, the biggest potential                                                               
enemy of getting this project done  is delays and failing to make                                                               
the aggressive timeline.   He asked whether Mr.  Noah agrees that                                                               
the psychology of marketing a  large amount of gas is significant                                                               
to Alaskans.                                                                                                                    
                                                                                                                                
MR. NOAH agreed.                                                                                                                
                                                                                                                                
11:23:42 AM                                                                                                                   
                                                                                                                                
SENATOR HUGGINS inquired  whether Mr. Noah agrees  that the state                                                               
may need to throw in a lot  of money to provide Fairbanks with an                                                               
assured supply of gas.                                                                                                          
                                                                                                                                
MR. NOAH said he thinks he would agree.                                                                                         
                                                                                                                                
SENATOR HUGGINS  asked whether Mr.  Noah believes  "in-state gas"                                                               
is a default  to "a big pipeline," as has  been portrayed by some                                                               
people.                                                                                                                         
                                                                                                                                
MR. NOAH responded he thinks it  is a matter of semantics at this                                                               
point.  In-state gas can either  come down "the big line" through                                                               
a spur  line or  a bullet line,  and on this  he would  prefer to                                                               
stay out of the politics.                                                                                                       
                                                                                                                                
SENATOR  HUGGINS inquired  whether he  is remembering  accurately                                                               
that Mr.  Noah said  there is potential  for significant  jobs in                                                               
this process beyond just construction.                                                                                          
                                                                                                                                
MR. NOAH agreed.                                                                                                                
                                                                                                                                
11:25:14 AM                                                                                                                   
                                                                                                                                
SENATOR  HUGGINS further  asked whether  he is  correct that  Mr.                                                               
Noah said future jobs would be  supported by an assured supply of                                                               
affordable energy.                                                                                                              
                                                                                                                                
MR. NOAH replied that one of two  things must be done.  If gas is                                                               
brought  off the  North Slope,  the only  way to  have reasonably                                                               
priced gas  is to  increase the  flow or to  subsidize it;  a low                                                               
flow would be  expensive gas.  If only the  residential market in                                                               
Anchorage and  Fairbanks is  dealt with,  it would  be relatively                                                               
expensive gas.   With only  about 650,000 Alaskans,  there really                                                               
is a problem.   No one working on this is  evil or anything else,                                                               
each person  just wants  to make something  happen.   The state's                                                               
leaders  must make  some decisions.    While the  numbers can  be                                                               
further refined, the basic information  and numbers are there and                                                               
it is  time to make  some decisions and move  forward.  If  it is                                                               
decided to  wait for  the "big  pipeline" for  all kinds  of good                                                               
reasons,  so be  it, but  then what  is the  plan?   Because this                                                               
thing is so complicated and there  are so many players in it now,                                                               
there is no focus  on the questions to be answered  and how to do                                                               
them.   "Time  to make  some decisions,"  he reiterated.   It  is                                                               
legislators and  the governor who  must sit down and  start doing                                                               
this.   It is now time  for legislators to decide  how to advance                                                               
this.  Lots  of people are working on these  numbers and they are                                                               
happy  to answer  questions, but  legislators are  darn close  to                                                               
having the information that is needed.                                                                                          
                                                                                                                                
11:27:56 AM                                                                                                                   
                                                                                                                                
SENATOR  HUGGINS  pointed  out  the  interdependence  of  various                                                               
industries  on  an energy  supply.    He  said he  is  dedicating                                                               
himself to  work as  hard as  he can to  do in-state  gas because                                                               
there is  no Cook Inlet  action plan that  will provide gas  in a                                                               
timely manner.   Fairbanks is  on its  knees because of  the high                                                               
price of energy.   He thanked Mr.  Noah for what he  has done for                                                               
Alaska.                                                                                                                         
                                                                                                                                
CO-CHAIR NEUMAN said  he thinks Senator Huggins speaks  for a lot                                                               
of legislators and people in Alaska.                                                                                            
                                                                                                                                
11:30:14 AM                                                                                                                   
                                                                                                                                
CO-CHAIR  JOHNSON  said  he  shares   many  of  Senator  Huggins'                                                               
sentiments.  He  expressed his concern about a  possible delay by                                                               
the void created with Mr. Noah's  departure.  He inquired why Mr.                                                               
Noah is leaving, but said Mr.  Noah can choose not to answer this                                                               
question.                                                                                                                       
                                                                                                                                
MR.  NOAH responded  that nobody  asked him  to leave,  he has  a                                                               
cherry processing plant  in Oregon he needs to tend  to and it is                                                               
not about  personalities.  He  said it is  not true, at  least on                                                               
his part,  that he, Commissioner  Irwin, and  Deputy Commissioner                                                               
Rutherford are mad at each other;  he just came to the conclusion                                                               
that legislators need to make some decisions.                                                                                   
                                                                                                                                
CO-CHAIR  JOHNSON   offered  his  appreciation  for   Mr.  Noah's                                                               
service.                                                                                                                        
                                                                                                                                
11:32:09 AM                                                                                                                   
                                                                                                                                
SENATOR WAGONER  understood the need  to make decisions  and that                                                               
the longer  the state  waits the less  opportunity there  will be                                                               
for the  state to get  its industrial  base back up  and running.                                                               
He asked when  figures would be available for  the delivered cost                                                               
of gas for just residential  use, residential and commercial use,                                                               
and then  industrial use on top  of that.  He  further asked what                                                               
subsidy the  industrial use would  provide on the tariff  for the                                                               
residential and  commercial use.   Noting the  Cook Inlet  gas on                                                               
top of this, he  inquired whether there is a way  to come up with                                                               
a matrix that shows all of these figures.                                                                                       
                                                                                                                                
MR. NOAH replied  absolutely.  However, he cautioned,  one of the                                                               
problems with,  say, bringing gas  off the  North Slope in  a 24-                                                               
inch  line is  that  future  growth is  anticipated,  and in  the                                                               
meantime  there is  capacity  that is  not being  paid  for.   He                                                               
pointed out  that a  smaller diameter  pipeline could  be brought                                                               
down,  thereby   reducing  the  cost  and   risk  to  residential                                                               
customers.   So, he continued,  when the  aforementioned question                                                               
is asked,  there are all  these other things  that go in  with it                                                               
and the  work plan  that is set  up will be  able to  answer that                                                               
question.   The 250  MMscfd is somewhere  in the  neighborhood of                                                               
that residential use.                                                                                                           
                                                                                                                                
11:34:45 AM                                                                                                                   
                                                                                                                                
SENATOR  WAGONER commented  that he  does not  think it  is being                                                               
very visionary to say a small line would be brought down.                                                                       
                                                                                                                                
MR. NOAH agreed, but said it affects that tariff.                                                                               
                                                                                                                                
SENATOR WAGONER  acknowledged that  that would  be the  case, but                                                               
said  he  was building  on  a  progression  getting up  into  the                                                               
industrial.  He  related that there are people  interested in the                                                               
gas liquids  who have been  to Kenai  to look at  potential plant                                                               
sites in the  area of Nikiski where there are  docks available as                                                               
well as space available for industrial docks.                                                                                   
                                                                                                                                
MR.  NOAH reiterated  that this  information will  be able  to be                                                               
seen  because  the  work  is  being done  in  increments  of  250                                                               
million, 500 million, 750 million,  and 1 billion [standard cubic                                                               
feet per day], and the base-case  scenario is a 24-inch line.  He                                                               
said he  thinks ENSTAR's  pipeline numbers  right now  are pretty                                                               
reasonable,  and  all  that  needs   to  be  added  are  the  gas                                                               
conditioning costs.  As long as  the work continues going the way                                                               
it is  now, there should be  good numbers in about  three or four                                                               
months.                                                                                                                         
                                                                                                                                
11:36:59 AM                                                                                                                   
                                                                                                                                
CO-CHAIR JOHNSON  requested further  clarification on  when those                                                               
fairly dependable numbers would be available.                                                                                   
                                                                                                                                
MR. NOAH said  he thinks there will be numbers,  but they may not                                                               
be the  end-definitive numbers; it  is really the  facility costs                                                               
that are  the question  right now.   In  further response  to Co-                                                               
Chair Johnson,  he said legislators  have received copies  of the                                                               
numbers that  the [In-State Gas  Project] gave to  the commercial                                                               
working group about  six weeks ago, and in that  are some numbers                                                               
from  ENSTAR.   The project  has looked  at ENSTAR's  numbers and                                                               
determined they are  reasonable numbers at this point  in time in                                                               
the costing process.                                                                                                            
                                                                                                                                
11:38:23 AM                                                                                                                   
                                                                                                                                
CO-CHAIR  JOHNSON  requested   that  those  preliminary  cost-of-                                                               
delivery numbers be submitted to the record for this meeting.                                                                   
                                                                                                                                
CO-CHAIR NEUMAN agreed to have that  done.  He requested Mr. Noah                                                               
to discuss the numbers.                                                                                                         
                                                                                                                                
MR. NOAH replied that he does not have the numbers memorized.                                                                   
                                                                                                                                
11:39:13 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  RAMRAS related  that in  the [November  18, 2009]                                                               
letter he wrote [to Governor  Parnell], he presumed those numbers                                                               
would be $2  at the wellhead, $1 for conditioning,  and nearly $3                                                               
for transportation,  for a total  of $6 [per million  cubic feet]                                                               
prior to hitting a local  distribution cost.  He inquired whether                                                               
this is a reasonable assumption for a threshold of 500 MMscfd.                                                                  
                                                                                                                                
MR. NOAH responded that he thinks the $3 cost for a 500-million-                                                                
cubic-feet-per-day pipeline  is a  reasonable cost.   He  said he                                                               
really  does  not  know  what   the  conditioning  cost  is,  and                                                               
therefore he  is hesitant to  say what that cost  is.  The  $2 at                                                               
the wellhead is a commercial number,  and he does not know how he                                                               
stands behind that number.                                                                                                      
                                                                                                                                
11:41:07 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  RAMRAS stated  that the  notion many  people have                                                               
proceeded on  with a large diameter  gas pipeline is that  if the                                                               
market is at $5, there  is an approximate $4 transportation cost,                                                               
which would be a netback at  the wellhead of $1 per million cubic                                                               
feet.  The  barrel of oil equivalent (BOE) is  about 6:1, so that                                                               
would be about a  $24 BOE tariff.  It is  currently $5 per barrel                                                               
to move oil  on the TAPS line,  so it would be about  $20 to move                                                               
an  equivalent  amount of  energy  to  Alberta  or Chicago.    He                                                               
therefore  presumed the  state would  be  able to  work with  the                                                               
producers to  come up  with a  cost of the  wellhead range  for a                                                               
small diameter line.                                                                                                            
                                                                                                                                
CO-CHAIR NEUMAN recessed the meeting until 2:00 p.m.                                                                            
                                                                                                                                
2:44:54 PM                                                                                                                    
                                                                                                                                
CO-CHAIR NEUMAN called the meeting back to order at 2:45 p.m.                                                                   
                                                                                                                                
MR. NOAH, in response to  Representative Ramras, said he does not                                                               
have anything  more to say in  regard to the last  three pages of                                                               
his presentation  as they were  contained within  the [morning's]                                                               
discussions.  He offered to answer any further questions.                                                                       
                                                                                                                                
MR. NOAH, in  response to Co-Chair Neuman, stated  that the cost-                                                               
of-delivery numbers had been given to the committee aide.                                                                       
                                                                                                                                
2:46:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS  noted that one of  the recommendations [on                                                               
slide 24  of Mr. Noah's presentation]  is to put the  backup plan                                                               
on a specific schedule.  He asked what Mr. Noah means by this.                                                                  
                                                                                                                                
MR.  NOAH pointed  out that  when  looking at  all the  different                                                               
options,  gas from  the  North  Slope is  truly  not in  Alaska's                                                               
control because  it is the  market that will determine  when that                                                               
gas goes to  the Lower 48.  Additionally, drilling  in Cook Inlet                                                               
is up to  the producers unless the state decides  it wants to pay                                                               
producers to drill.   He said he thinks the  numbers show that an                                                               
in-state gas pipeline  is the most cost-effective  thing that can                                                               
be done in terms  of energy, and if this is  chosen as the backup                                                               
plan it  should be  put on  a specific schedule.   The  state can                                                               
always look to  see if the "big line" is  coming along or whether                                                               
drilling  in Cook  Inlet  has found  a big  new  discovery.   But                                                               
absent that,  if there is  not something actually  moving forward                                                               
within [the  state's] control,  then all of  this will  just keep                                                               
moving  out in  front.   Try and  make the  open season  work, he                                                               
advised, "and if it does, that  will tell you something."  But if                                                               
it  does not,  then [legislators]  need to  decide whether  it is                                                               
alternative energy or in-state gas, and  if it is either of those                                                               
two  it  needs to  be  put  on a  schedule  and  allowed to  move                                                               
forward.  "You can always slow down," he added.                                                                                 
                                                                                                                                
2:48:59 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  NEUMAN  requested  Mr.  Noah  to  state  how  he  feels                                                               
development for an in-state gas  pipeline should move forward and                                                               
the timelines he would suggest.                                                                                                 
                                                                                                                                
MR.  NOAH said  many  of the  milestones are  in  the handout  he                                                               
provided regarding  the schedule that  the project is  working on                                                               
right now  for an in-state  gas pipeline.   He said his  point is                                                               
that there  is a need  for a specific plan,  and a plan  has task                                                               
and schedule with it.  This has  to do with all the energy issues                                                               
that are being dealt with.   He recommended that the governor and                                                               
the legislature  come up with  a specific plan that  outlines the                                                               
order of what will be done next, not numerous options.                                                                          
                                                                                                                                
CO-CHAIR NEUMAN  inquired what  specific qualifications  Mr. Noah                                                               
thinks his successor should have.                                                                                               
                                                                                                                                
MR. NOAH replied, "That is absolutely the governor's choice."                                                                   
                                                                                                                                
2:51:12 PM                                                                                                                    
                                                                                                                                
CO-CHAIR JOHNSON said his definition  of a successful open season                                                               
is one  that can  be taken to  the bank and  financed.   He asked                                                               
whether Mr. Noah  would consider the open season to  be failed or                                                               
unclear if the gas is bid with many contingencies.                                                                              
                                                                                                                                
MR. NOAH said not necessarily  on a commercial standpoint because                                                               
having all the  commercial terms worked out on a  project of that                                                               
scale  would   be  tough.     However,   he  would   consider  it                                                               
inconclusive if  a list of things  needed from the state  were to                                                               
come back  because then the state  stays in the same  place it is                                                               
right now.   Would the  legislature and the governor  be prepared                                                               
to  take  those issues  on?    There  is  nothing that  says  the                                                               
legislature has  to; it  is just that  the legislature  must make                                                               
that  decision.   If the  legislature decides  no, or  cannot put                                                               
together enough  consensus to deal  with that, it means  the "big                                                               
project" is just going to remain in limbo.                                                                                      
                                                                                                                                
MR.  NOAH  related that  the  goal  of  the Alaska  Gas  Producer                                                               
Pipeline Team  (AGPPT) study, which ended in 2002  and was funded                                                               
by the producers, was to  have enough information put together to                                                               
make a  Federal Energy Regulatory  Commission (FERC) filing.   It                                                               
is  now 2009  and  information is  being gathered  to  do a  FERC                                                               
filing.    While  people  have  probably spent  a  lot  of  money                                                               
upgrading  the cost  estimate, nothing  has really  advanced from                                                               
2002.   Producers  wanted several  things when  they closed  that                                                               
study up:   1) they  wanted the  federal government to  give them                                                               
construction  loan guarantees,  which  they got;  2) they  wanted                                                               
fiscal certainty  on whether the state  was going to tax  them at                                                               
the  time when  the  oil  line goes  down,  which  they have  not                                                               
gotten; 3) they  needed to know what is going  to occur in Canada                                                               
with the  First Nation  groups; and  4) they  needed to  know the                                                               
stipulations  from FERC.   As  good business  is doing,  they are                                                               
just going down the list and  will continue doing that until they                                                               
get those answers and then they  will do a feasibility study.  If                                                               
at the  end of this  open season  it is inconclusive  because the                                                               
question  of fiscal  certainty is  put back  in the  state's lap,                                                               
will legislators  look at that in  2011, 2012, or when?   He said                                                               
his point is that this thing  just keeps rolling because there is                                                               
no specific set schedule.   However, the coming economic problems                                                               
and lack of energy problems are still coming.                                                                                   
                                                                                                                                
2:55:22 PM                                                                                                                    
                                                                                                                                
MR. NOAH added that if [legislators]  decide not to deal with the                                                               
fiscal  certainty issue,  then  that  is a  decision  point.   If                                                               
[legislators]  decide not  to fund  alternative energy,  then the                                                               
market   is  totally   open  for   an   in-state  gas   pipeline.                                                               
[Legislators]  need to  go through  this  hierarchy of  decisions                                                               
because, despite the tremendous amount  of money and energy being                                                               
spent,  there is  no forward  movement on  a major  gas sale  and                                                               
getting energy  in-state.  There is  lots of activity, but  it is                                                               
up and down, not forward.                                                                                                       
                                                                                                                                
2:56:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS  noted  that  the  schedules  outlined  on                                                               
slides  7 and  8  show the  record of  decision  being issued  in                                                               
February 2011  and [the  bidding process]  for selling  the state                                                               
package in April  2011.  He said some  [legislators] consider the                                                               
term "conditioned open season," which  is the term being used for                                                               
the coming  open season,  as being a  euphemism for  "failed open                                                               
season."   He assumed that if  the state stays on  this schedule,                                                               
and it  is economic  enough to  attract private  sector interest,                                                               
the go  or no-go point  will be reached in  about 14 months.   At                                                               
that point, money  would be exchanged for this  package and there                                                               
is  an implied  commitment, such  that  dirt would  be turned  in                                                               
2012.   He asked whether he  is correct in understanding  this to                                                               
be the schedule for an in-state line.                                                                                           
                                                                                                                                
MR. NOAH  began his  response by stating  that the  project wants                                                               
the open season to work.                                                                                                        
                                                                                                                                
REPRESENTATIVE  RAMRAS interjected  that  the administration  has                                                               
made it  quite clear that it  will be a conditioned  open season.                                                               
However, he said that this is not part of his question.                                                                         
                                                                                                                                
2:59:58 PM                                                                                                                    
                                                                                                                                
MR.  NOAH allowed  that construction  by spring  or early  summer                                                               
2012 is quite  a stretch, and that it depends  on how much effort                                                               
a company is willing  to put out.  This is  why he has repeatedly                                                               
stated that  this schedule is  extremely aggressive, he said.   A                                                               
company  can do  this, but  the company  cannot bobble  around at                                                               
all, and  this is why having  the commercial players lined  up is                                                               
so important.   If someone got this package and  then had to line                                                               
up the commercial  players after that, then it  would not happen.                                                               
Doing the commercial work in parallel is very important.                                                                        
                                                                                                                                
3:01:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS  assumed that the  April 2011 buyer  of the                                                               
state's package should expect that it  can move forward on an in-                                                               
state line.                                                                                                                     
                                                                                                                                
MR. NOAH explained that the buyer  will have to get a whole group                                                               
of notices  to proceed in terms  of the permits and  will have to                                                               
go to final design  of that pipeline.  There is a  lot of work to                                                               
do and this  is where the schedule is very  aggressive.  So, yes,                                                               
this schedule  can occur, but  there cannot be any  roadblocks in                                                               
the way for it to stay on that schedule.                                                                                        
                                                                                                                                
CO-CHAIR NEUMAN thanked Mr. Noah for his work.                                                                                  
                                                                                                                                
3:03:22 PM                                                                                                                    
                                                                                                                                
TOM IRWIN,  Commissioner, Department of Natural  Resources (DNR),                                                               
set the foundation  from which he is speaking by  quoting from an                                                               
August  3, 2009,  letter that  he,  Mr. Noah,  and Department  of                                                               
Revenue Commissioner Pat Galvin received from Governor Parnell:                                                                 
                                                                                                                                
     The  well-being of  our economy  and people  depends in                                                                    
     significant  part   on  cheaper  energy.     Thanks  to                                                                    
     Governor Palin's  leadership we have a  team working on                                                                    
     in-state  gas   options  for   Alaskans.     We  remain                                                                    
     committed to  that work and will  continue driving hard                                                                    
     to assure Alaska's resources power Alaskan's homes.                                                                        
                                                                                                                                
MR. IRWIN said he personally  supports this direct order from the                                                               
governor.    To further  set  the  foundation  from which  he  is                                                               
speaking,  he also  quoted from  Governor  Parnell's December  2,                                                               
2009, response to a letter from Representative Ramras:                                                                          
                                                                                                                                
     My commitment  to bring a  long-term, stable  supply of                                                                    
     energy   to   all   Alaskans  remains   strong.      My                                                                    
     administration continues  to evaluate  the merits  of a                                                                    
     stand-alone   pipeline  from   the  North   Slope,  the                                                                    
     foothills of the Brooks Range,  and the Nenana Basin to                                                                    
     Fairbanks and  Southcentral Alaska,  as well as  a spur                                                                    
     line to  the Southcentral region from  a major pipeline                                                                    
     to  the Lower  48.    I want  to  assure  you that  all                                                                    
     options to  bring affordable  and dependable  energy to                                                                    
     the Interior and the Railbelt are being explored.                                                                          
                                                                                                                                
COMMISSIONER IRWIN  said the governor's letter  closes by stating                                                               
that  the  directives outlined  in  his  August 3,  2009,  letter                                                               
remain in effect.                                                                                                               
                                                                                                                                
3:05:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS interjected  that he  wrote an  eight-page                                                               
letter  and  the aforementioned  quote  was  100 percent  of  the                                                               
response he received.                                                                                                           
                                                                                                                                
3:06:11 PM                                                                                                                    
                                                                                                                                
COMMISSIONER IRWIN  offered his appreciation for  Co-Chair Neuman                                                               
sending a letter  to Governor Parnell which stated  that Mr. Noah                                                               
would be giving testimony [at  this hearing].  He further related                                                               
that Co-Chair Neuman's letter requested  Governor Parnell to send                                                               
members of his administration able  to address the following:  1)                                                               
the direction the  governor will take in  development of Alaska's                                                               
in-state gas and  infrastructure, and 2) questions  raised in the                                                               
November 18 [2009]  letter from the chair of  the House Judiciary                                                               
Standing Committee.   Commissioner Irwin  said he is  prepared to                                                               
address both.                                                                                                                   
                                                                                                                                
3:06:49 PM                                                                                                                    
                                                                                                                                
CO-CHAIR NEUMAN offered his belief  that Commissioner Irwin would                                                               
also  be   addressing  a  letter   to  the   administration  from                                                               
Representative Chenault, Speaker of the House.                                                                                  
                                                                                                                                
COMMISSIONER IRWIN answered yes.                                                                                                
                                                                                                                                
3:07:13 PM                                                                                                                    
                                                                                                                                
COMMISSIONER IRWIN  pointed out  that the work  done by  Mr. Noah                                                               
and his technical group has  provided a real foundation, which is                                                               
respected as are his team members.   Governor Parnell has made it                                                               
clear that he wants Mr. Noah's  team to remain involved.  He said                                                               
Mr. Noah  was being  modest and has,  at the  governor's request,                                                               
provided  a list  of qualifications  that are  important for  the                                                               
project manager's  job, and the  governor is pursuing  looking at                                                               
those qualifications.                                                                                                           
                                                                                                                                
COMMISSIONER  IRWIN related  that Governor  Parnell supports  the                                                               
"bullet  line"  work,  and [the  department]  also  supports  the                                                               
"bullet  line."    The  proof  of the  pudding  is  that  in  the                                                               
governor's announced budget yesterday,  $6.5 million was proposed                                                               
to carry forward the work on the "bullet line."                                                                                 
                                                                                                                                
3:08:59 PM                                                                                                                    
                                                                                                                                
COMMISSIONER  IRWIN said  he  is convinced  the  AGIA project  is                                                               
working  and  moving  forward.     For  example,  when  AGIA  was                                                               
presented  it was  heard  the  state would  not  get a  qualified                                                               
bidder, but the  state got the premier pipeline  company in North                                                               
America [TransCanada].   It was heard that  TransCanada could not                                                               
be used  because of the  "withdrawn partner issue," but  that has                                                               
been resolved.  It was heard  that there would never be a company                                                               
interested  in   joining  this,  but  [Exxon   Mobil  Corporation                                                               
(ExxonMobil)] has signed an agreement  with TransCanada.  How the                                                               
two  companies  have  approached   this  is  significant.    When                                                               
TransCanada presented  its proposal it  said it would  design the                                                               
pipeline  but would  like someone  more qualified  to do  the gas                                                               
treatment plant,  and there is  no company better  qualified than                                                               
ExxonMobil.   These two large  "A-team" companies know  what they                                                               
are doing and have come together  in a seamless fashion in a very                                                               
short time.   Today they are designing a pipeline  from the North                                                               
Slope  to  Alberta  as  well   as  a  pipeline  to  Valdez  where                                                               
commercial parties can come together.                                                                                           
                                                                                                                                
3:11:20 PM                                                                                                                    
                                                                                                                                
COMMISSIONER IRWIN said the state  has gained several things from                                                               
this.   One  gain was  access  to all  of  the data  in the  $125                                                               
million  study completed  by the  producers [in  2002].   Another                                                               
gain was  access to  all the information  for thousands  of drill                                                               
holes from  the "Alyeska  line."  The  design of  North America's                                                               
largest pipeline  project has begun.   The state has  full access                                                               
to inspect what  is being done and  how it is being  done.  These                                                               
two companies  are committed  to making this  work.   Progress is                                                               
being  made, AGIA  is moving  forward, and  legislators will  see                                                               
that progress at the end of  January [2010] when the full filings                                                               
are  made  for   open  season  and  the   design,  criteria,  and                                                               
information  become  available.   ExxonMobil  joined  TransCanada                                                               
because it  sees that as  the way to work  with the state  and as                                                               
the  way to  get through  Canada.   Thus,  the state  has a  good                                                               
system going as well as significant progress.                                                                                   
                                                                                                                                
3:12:54 PM                                                                                                                    
                                                                                                                                
COMMISSIONER IRWIN  said he is  talking about AGIA because  it is                                                               
critical  the  state  not  get  sidetracked  since  that  is  the                                                               
economic long-term  future of Alaska;  AGIA does not  exclude the                                                               
work on the "bullet  line."  The time issue on  the "big line" is                                                               
the  gas  treatment  plant  for  which  real  data  needs  to  be                                                               
received.   Mr. Noah  is right, the  same kind of  work on  a gas                                                               
treatment plant  must still  be looked at  for the  "bullet line"                                                               
and  Mr.  Noah's team  is  needed  for putting  that  information                                                               
together.  He said AGIA  is working, but other significant things                                                               
have to be  done and [the administration] is working  on them; it                                                               
all links  together.  Short term,  the state has an  energy issue                                                               
and  the   administration  supports  the   conservation  efforts;                                                               
everyone can do better in every office.                                                                                         
                                                                                                                                
3:14:00 PM                                                                                                                    
                                                                                                                                
COMMISSIONER IRWIN,  in recognition  of the  issues the  state is                                                               
facing, specified that work is being  done on gas storage for the                                                               
Cook  Inlet.    [The  department] will  be  publishing  a  report                                                               
imminently  on   Cook  Inlet  reserves   that  shows   there  are                                                               
significant reserves left in Cook Inlet  - the issue is they must                                                               
be  drilled, there  must  be deliverability,  and  the costs  and                                                               
incentives for having companies do  that must be determined.  The                                                               
gas is there, it just needs to be drilled.                                                                                      
                                                                                                                                
COMMISSIONER  IRWIN noted  the state  has land  management issues                                                               
and  is working  on development  plans across  the state  for the                                                               
short-term.   He said there is  no lack of oil  for "Flint Hills"                                                               
where two cracking columns are  currently being run at full bore.                                                               
In his opinion, this is the  sweet spot for Flint Hills on price.                                                               
In the mid-term the state is  working on alternative energy - for                                                               
example,  the $25  million  [transmission]  line from  [proposed]                                                               
wind generators  on Fire Island to  Anchorage.  More and  more is                                                               
being  heard   about  underground   coal  gasification,   and  an                                                               
independent company is investing in this.                                                                                       
                                                                                                                                
COMMISSIONER IRWIN  disagreed that  the state  is doing  too many                                                               
things and  said these are critical  things.  He offered  to talk                                                               
about geothermal,  exploration licenses,  and LNG export  if they                                                               
brought up later.  For the  long-term, he said there is AGIA, the                                                               
"spur line," and the "bullet line."                                                                                             
                                                                                                                                
3:16:27 PM                                                                                                                    
                                                                                                                                
CO-CHAIR JOHNSON  inquired whether  Commissioner Irwin  agrees or                                                               
disagrees  with Mr.  Noah's  statement that  the  state needs  to                                                               
focus,  pick a  project, and  move on  with it;  rather than  the                                                               
current track of investigating multiple types of projects.                                                                      
                                                                                                                                
COMMISSIONER  IRWIN  responded,  "I   believe  we  have  to  make                                                               
decisions."  As indicated in  Mr. Noah's presentation, all of the                                                               
information is  not yet  known; for  example, neither  the timing                                                               
nor the cost  of the gas treatment  plant is yet known.   What is                                                               
good for the Railbelt could be  a very different answer for rural                                                               
villages.  While the state  cannot be everything to everybody, it                                                               
can  focus on  energy, and  that  is what  is being  done by  the                                                               
different   groups  investigating   different  types   of  energy                                                               
generation in  different locations throughout Alaska.   He argued                                                               
that if [legislators]  were to make a decision  today, they would                                                               
be lacking the  information from all the design on  AGIA, as well                                                               
as lacking the  "bullet line" information.  He  said his proposal                                                               
is that [legislators] need to  make decisions, but that they need                                                               
to do it with more information.                                                                                                 
                                                                                                                                
COMMISSIONER IRWIN, in response to  Co-Chair Neuman, stated he is                                                               
bringing all of  this up because it was discussed  earlier and he                                                               
does not  want premature decisions  to be discussed  without that                                                               
input.                                                                                                                          
                                                                                                                                
3:18:56 PM                                                                                                                    
                                                                                                                                
CO-CHAIR NEUMAN  referenced Mr. Noah's  contention that a  lot of                                                               
good people  are working on a  lot of good projects,  but without                                                               
good   coordination   between   them.     Coordination   is   the                                                               
commissioner's job, he opined.   He asked Commissioner Irwin what                                                               
his  plan  is  to  bring  these together,  as  requested  in  the                                                               
governor's  letter, because  there is  concern among  legislators                                                               
that communication and coordination is not happening.                                                                           
                                                                                                                                
3:20:54 PM                                                                                                                    
                                                                                                                                
COMMISSIONER IRWIN  replied he thinks  [the department]  has been                                                               
trying its very best to comply  with the spirit and the letter of                                                               
the  governor's  letter.    "We  believe  information  should  be                                                               
shared," he said.   For example, the "bullet line"  data needs to                                                               
be shared  in relation  to AGIA,  but the  issue is  that neither                                                               
group is  finished with  that imminently soon.   Upon  receipt of                                                               
the   governor's   letter,   he  assigned   Deputy   Commissioner                                                               
Rutherford  to meet  with  Mr.  Noah and  to  access Kevin  Banks                                                               
[Director,  Division of  Oil  &  Gas].   Mr.  Noah  reports to  a                                                               
different area, although everyone is  all the same team, which is                                                               
the administration.   [The department]  is communicating  what it                                                               
can as  quickly as it  can, although  no one would  disagree that                                                               
there  can always  be more  communication.   Legislators and  the                                                               
administration are  all working for  Alaskans and there  needs to                                                               
be communication; however, he said  he thinks legislators need to                                                               
be  very,  very careful  with  all  of  the facts  when  deciding                                                               
whether to exclude  a project and whether today is  the right day                                                               
to make  this decision.  There  is a time urgency,  not a crisis,                                                               
and there is  a difference.  He said  the increased communication                                                               
will start with him.                                                                                                            
                                                                                                                                
3:23:21 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  JOHNSON asked  whether  Commissioner  Irwin has  talked                                                               
with Mr.  Noah's team  members to  learn if  they are  willing to                                                               
stay on after Mr. Noah's departure.                                                                                             
                                                                                                                                
COMMISSIONER  IRWIN answered  he is  not hiring  that individual,                                                               
only relaying  the governor's statement  that he wants  that team                                                               
and  he therefore  has  no doubt  this is  what  the governor  is                                                               
doing.   While  he believes  a newly-hired  leader would  ask the                                                               
team to stay on, he believes  the team members would want to know                                                               
who the leader is first.                                                                                                        
                                                                                                                                
3:24:43 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  JOHNSON  understood  that  Commissioner  Irwin  is  not                                                               
involved  in the  hiring of  Mr.  Noah's replacement  and is  not                                                               
involved enough  with Mr. Noah's  team members to talk  with them                                                               
about whether they will be staying.                                                                                             
                                                                                                                                
COMMISSIONER  IRWIN responded  he  is not  doing  that because  a                                                               
member  of  the governor's  staff,  Mr.  Gene Therriault  [Senior                                                               
Policy Advisor/In-State  Energy], is  the person  responsible for                                                               
doing that.   Mr. Therriault reports to the governor  as does he,                                                               
but he has no doubt the  governor will request those team members                                                               
to stay.   He said that  for the good  of the state he  hopes the                                                               
team members  will decide to stay,  and he will talk  to the team                                                               
members if he is asked to do so.                                                                                                
                                                                                                                                
3:26:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS  said he  shares Commissioner  Irwin's view                                                               
that it is a time urgency.   He offered his belief that the state                                                               
is  on the  cusp  of  an energy  crisis  for  Alaskans, and  that                                                               
residents of  the Interior  are in  full-blown energy  crisis and                                                               
therefore  have  a unique  vulnerability.    He inquired  whether                                                               
Commissioner Irwin believes the "bullet line" is a backup plan.                                                                 
                                                                                                                                
COMMISSIONER IRWIN  replied that it  depends.  It is  a necessity                                                               
to  move it  forward  because it  is  one of  the  arrows in  the                                                               
quiver.  The timing  and the costs need to be known.   He said he                                                               
takes Mr. Noah's  word that the timing is aggressive.   When [the                                                               
administration]  gave legislators  AGIA, a  very aggressive  plan                                                               
was  not given.   The  reality is  that the  gas treatment  plant                                                               
[GTP] needs to be firmed up and  is critical to get done.  But is                                                               
the "bullet  line" a  backup?   What happens if  gas is  found in                                                               
Nenana?   He said he is  hoping for great success  in Nenana, and                                                               
therefore  [the administration]  does  not want  to exclude  that                                                               
commercial development by proclaiming that  all is done and it is                                                               
the "bullet line."                                                                                                              
                                                                                                                                
3:27:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS related  that  the  in-state gas  pipeline                                                               
team  said there  are five  increments so  that the  plan can  be                                                               
adjusted accordingly should "Foothills  gas," or "Nenana gas," or                                                               
"Prudhoe  Bay  gas" show  up.    He  asked whether  the  in-state                                                               
gasline is  considered a  backup plan  or not, and  if it  is, at                                                               
what point the button is pushed  to start down that approach.  He                                                               
reviewed the  schedule presented  by Mr.  Noah and  asked whether                                                               
Commissioner Irwin agrees with this schedule.                                                                                   
                                                                                                                                
COMMISSIONER IRWIN answered  he cannot verify the  timing, but in                                                               
his mind the trigger has already  been pulled because the work is                                                               
already being done.   If the legislature  supports the governor's                                                               
proposed  budget the  work  will  continue.   Is  it the  primary                                                               
backup today?  Maybe.   It is an analysis today  that needs to be                                                               
kept on track.                                                                                                                  
                                                                                                                                
3:29:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS  inquired whether  Mr. Irwin  would support                                                               
the future buyer  of the state's package proceeding  with work on                                                               
an  in-state gasline  as  a backup  plan  or as  a  plan to  move                                                               
forward that is unimpeded by DNR.                                                                                               
                                                                                                                                
COMMISSIONER  IRWIN  responded  there  is  no  benefit  of  [DNR]                                                               
impeding anything.   Today that is  an analysis, and as  Mr. Noah                                                               
explained that  buyer would  have to  go do  an EIS.   Commercial                                                               
parties are  not going  to totally sanction  that, but  it should                                                               
keep moving forward.  It is  too critical to the people in Alaska                                                               
for  [the  department] to  decide  today  to  stop or  throw  out                                                               
anything.  Things  must keep moving and by [2011]  the state will                                                               
be  so  much  wiser  because   it  will  have  AGIA  information,                                                               
responses on open season, more  information from the In-state Gas                                                               
Project, responses on  what happens with Cook  Inlet, and perhaps                                                               
another chance  at a drill rig  in Minto Flats or  the foothills.                                                               
A lot of sequential things are  taking place and today is not the                                                               
day to chuck out options; today is  the day to make sure that all                                                               
of these things are progressing.                                                                                                
                                                                                                                                
3:31:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS asked whether DNR  will support - 12 months                                                               
from now  in the fourth quarter  of 2010 and provided  there is a                                                               
conditional  open  season  -  putting  this  basket  of  permits,                                                               
preliminary EIS work,  and the engineering work up for  sale to a                                                               
bidder who will then pursue an in-state gas pipeline.                                                                           
                                                                                                                                
COMMISSIONER IRWIN replied  that before he can say  yes, he needs                                                               
to know  the cost  of the  "bullet line," the  new timing  of the                                                               
"bullet  line,"  who the  commercial  players  are, and  who  the                                                               
parties are  that are  buying and  selling the gas.   He  said he                                                               
cannot be asked  to give a blanket yes or  no on anything because                                                               
he  must  know  the  details  before  he  can  answer.    As  DNR                                                               
commissioner, he will support anything  that makes economic sense                                                               
to get Alaskans economic energy.                                                                                                
                                                                                                                                
3:32:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS   said  he   is  talking  about   a  buyer                                                               
purchasing  those  permits,  not  the  state  moving  forward  in                                                               
evaluating the risk  variables.  Will DNR support  putting up for                                                               
sale  that  basket  of intellectual  property  with  the  implied                                                               
notion  that the  buyer could  proceed with  an in-state  "bullet                                                               
line" and have DNR's support, he asked.                                                                                         
                                                                                                                                
COMMISSIONER  IRWIN  answered  that  if  there  is  a  commercial                                                               
opportunity  he  does not  see  any  reason  why DNR  would  not,                                                               
knowing what is known today.                                                                                                    
                                                                                                                                
3:33:03 PM                                                                                                                    
                                                                                                                                
CO-CHAIR JOHNSON inquired whether  Commissioner Irwin sees taking                                                               
500  million cubic  feet per  day off  the North  Slope or  Point                                                               
Thomson as being any kind of a threat to a large diameter pipe.                                                                 
                                                                                                                                
COMMISSIONER  IRWIN responded  that [the  administration] planned                                                               
for that in AGIA.  Then, what  is being looked at is economies of                                                               
scale and  it is important  for the state  to consider that.   If                                                               
the "big line"  moves forward, which he thinks it  will, the best                                                               
way  to get  economic gas  energy is  a "spur  line" and  this is                                                               
provided for in  AGIA.  He does not see  a competition there, and                                                               
[the administration] made that clear  and this is why 500 million                                                               
cubic feet per day  is in there.  Also, as part  of AGIA and part                                                               
of the filing, it is required  that the parties - TransCanada and                                                               
ExxonMobil -  do an  in-state gas  consumption analysis  and this                                                               
will be  shared with everyone.   That is in progress  and will be                                                               
critical to  look at.   It will show different  consumption rates                                                               
and  where and  when,  and  this will  tie-in  the  help on  this                                                               
discussion.                                                                                                                     
                                                                                                                                
3:34:37 PM                                                                                                                    
                                                                                                                                
CO-CHAIR JOHNSON,  in regard to  Mr. Noah's statement  that about                                                               
600 MMscfd is needed in addition  to the 500 MMscfd to truly open                                                               
the state for business, asked whether  the work being done now on                                                               
this pipeline is subjecting the state to treble damages.                                                                        
                                                                                                                                
COMMISSIONER IRWIN replied  no.  However, the issue  that must be                                                               
looked at  is that Cook Inlet  is not going to  stop immediately.                                                               
He said  he believes Mr. Noah  used the figures 250  million, 500                                                               
million, 750 million, and 1000 MMscfd.                                                                                          
                                                                                                                                
3:35:31 PM                                                                                                                    
                                                                                                                                
CO-CHAIR JOHNSON  clarified that  he is  referring to  Mr. Noah's                                                               
statement about  how much  gas would be  needed for  Donlin Creek                                                               
Gold Mine  and gas-to-liquids (GTL)  which would  not necessarily                                                               
come  to  Anchorage  or  be  competitive  with  Cook  Inlet  gas,                                                               
although anything  that comes further  would be competitive.   He                                                               
said he thinks the state has had  too narrow a view of energy and                                                               
should be looking  at gasifying Alaska and therefore  that is the                                                               
number he wants to look at in terms of bringing gas.                                                                            
                                                                                                                                
3:36:12 PM                                                                                                                    
                                                                                                                                
COMMISSIONER IRWIN answered that it  must be decided what will be                                                               
done with the gas.  For  example, [the department] has heard that                                                               
Donlin Creek Gold Mine would rather  take gas from Cook Inlet for                                                               
the  economics  of it.    A  Cook  Inlet  study will  shortly  be                                                               
released, at which  time the numbers can be considered.   It is a                                                               
long ways  to bring gas  from the North  Slope and it  would kill                                                               
the  Cook Inlet  basin, but  it might  be the  decision that  the                                                               
"power  people" make.   Consumption  of the  600 MMscfd  plus the                                                               
amount  produced by  Cook  Inlet  will not  all  happen at  once.                                                               
Thus, at startup and for a period  of time there would need to be                                                               
subsidization, because  a low flow and  a bigger line is  not the                                                               
economic way to  go unless it is subsidized.   The following must                                                               
be looked  at:  timing  of startup, where  the 600 MMscfd  of gas                                                               
would be used, how quickly industry  would switch over to it, and                                                               
where that industry  will start in the timeline  for its permits.                                                               
A timeline  for when Donlin Creek  Gold Mine and the  Pebble Mine                                                               
would start is  currently unclear; thus, while the  state can use                                                               
them in its long-term planning, it  cannot count on that into the                                                               
bank when the first gas is run down the line.                                                                                   
                                                                                                                                
COMMISSIONER IRWIN,  in regard to  exporting LNG, said  [DNR] was                                                               
terribly  misquoted as  [the department]  would love  to see  the                                                               
"LNG plant"  running.  [The  department] supported that  the last                                                               
time by asking  the companies to drill seven wells  and they have                                                               
honored that.   This  time, after watching  what has  happened in                                                               
Cook Inlet,  [DNR] believes that it  is not a matter  of drilling                                                               
seven  wells  but  of  replacing  the  reserves  that  have  been                                                               
consumed.   Legislators,  the administration,  and the  companies                                                               
need to have this important  discussion.  The LNG cannot continue                                                               
being  shipped out  at the  current  rate, the  reserves must  be                                                               
replaced.   [The  department]  has  not said  to  shut down  that                                                               
plant; rather the reserves need to be replaced.                                                                                 
                                                                                                                                
3:38:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS,  in regard  to the "Conoco  LNG facility,"                                                               
asked  whether that  is a  reasonable standard  that is  going to                                                               
allow for  the survivability of that  potential industrial anchor                                                               
for a small diameter gas pipeline  or whether that is a mechanism                                                               
to accelerate  a decision by  the owners  of the facility  to not                                                               
keep it open.                                                                                                                   
                                                                                                                                
COMMISSIONER IRWIN  responded that it  could be a  very important                                                               
standard to keep replacing reserves  in Cook Inlet to protect the                                                               
people who  are using gas.   Should that  be taken off  the North                                                               
Slope?   If  [legislators] think  that  is a  critical step,  "we                                                               
could agree," he  said.  However, once the timing  of the "bullet                                                               
line" is seen and if it is close  to the same time and LNG export                                                               
is  determined as  the commercial  way to  go, then  the question                                                               
that must be asked is, Why not  go to major LNG export given that                                                               
a line to Valdez is already being designed?                                                                                     
                                                                                                                                
3:40:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS proffered  that setting  a condition  on a                                                               
producer that the  producer does not want to meet  is the same as                                                               
the  state not  contributing  to keeping  that industrial  anchor                                                               
open, regardless of which gas line becomes a reality.                                                                           
                                                                                                                                
COMMISSIONER IRWIN  replied that  the timing  needs to  be looked                                                               
at.    The permits  time-out  in  a  year  and [the  "Conoco  LNG                                                               
facility"] will make  its decision long before  the "bullet line"                                                               
gets here.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  RAMRAS  interjected  that  [DNR]  can  make  that                                                               
rational   for  [the   "Conoco   LNG   facility"]  by   attaching                                                               
unreasonable conditions.                                                                                                        
                                                                                                                                
COMMISSIONER IRWIN  asked whether  Representative Ramras  is then                                                               
proposing accelerating  the depletion of resources  in Cook Inlet                                                               
and wishing  to explain  to the people  in Anchorage  where their                                                               
gas  went.   The two  sides to  this story  must be  managed very                                                               
carefully, because he does not  think this is what Representative                                                               
Ramras is proposing.                                                                                                            
                                                                                                                                
3:41:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS  said it is the  gas that is coming  out of                                                               
Cook Inlet in the summer that  is being talked about.  He offered                                                               
his  understanding that  there is  insufficient  storage and  the                                                               
"LNG plant"  is being  used for a  makeshift storage  facility in                                                               
the winter.   He related  that while visiting that  facility last                                                               
week, people told him the state  is leaving them high and dry and                                                               
that they are  anticipating looking for work.   After March 2011,                                                               
will  the people  at the  "Conoco  LNG facility"  be looking  for                                                               
work, he inquired.                                                                                                              
                                                                                                                                
COMMISSIONER IRWIN  answered he  does not  think so.   He  said a                                                               
look at DNR's record will show that  DNR went to bat for the "LNG                                                               
plant" the last time.  At  that same time, DNR also protected the                                                               
Alaskans in Anchorage by getting  seven wells drilled, along with                                                               
an agreement  to help other  explorers in  the area put  gas into                                                               
that "LNG  plant" when there  is the  capacity.  The  [LNG] plant                                                               
would  be shut  down  anyway in  the high  demand  period of  the                                                               
winter, so DNR  ended up being the plant's biggest  advocate.  He                                                               
reiterated that the  department must manage both,  and noted that                                                               
Deputy Commissioner  Rutherford was  the major player  in working                                                               
out all the issues last time.                                                                                                   
                                                                                                                                
3:43:52 PM                                                                                                                    
                                                                                                                                
CO-CHAIR   NEUMAN  added   that  these   questions  are   due  to                                                               
frustration.  He  returned the discussion to the topic  of an in-                                                               
state gasline  and how that  would be done  and how jobs  will be                                                               
created for Alaskans.                                                                                                           
                                                                                                                                
COMMISSIONER IRWIN responded that  the in-state gasline certainly                                                               
will [create jobs for Alaskans].                                                                                                
                                                                                                                                
CO-CHAIR NEUMAN  surmised that under  order of the  governor, DNR                                                               
will be  supporting every available  option and  continue looking                                                               
at  every available  option to  sell Alaska's  resources anywhere                                                               
and everywhere it can.                                                                                                          
                                                                                                                                
COMMISSIONER  IRWIN replied  absolutely.   The department  has to                                                               
pursue all  these issues.  He  reiterated that he does  not think                                                               
it is a crisis, but that  it is an absolute priority these things                                                               
get sorted  out.  The  department is pro-business and  would love                                                               
to see more export.  However, DNR  cannot work in a vacuum as the                                                               
U.S. Department of  Energy will make sure the  in-state needs are                                                               
met before an export is allowed.                                                                                                
                                                                                                                                
3:46:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS, in  regard to a gas  conditioning plant on                                                               
the  North Slope,  asked whether  Mr. Noah  has the  authority to                                                               
discuss  "shared  services" with  the  producers  to be  able  to                                                               
propose that with the basket of  assets for a potential buyer for                                                               
the development of the "bullet line."                                                                                           
                                                                                                                                
COMMISSIONER IRWIN answered that this is  not an issue as long as                                                               
it  is  information  that  is  shared  both  ways.    In  further                                                               
response, he  clarified that [the  department] does not  see much                                                               
opportunity on  the slope  to not build  a facility  that handles                                                               
the new  flow, so [DNR] would  be interested in finding  out what                                                               
shared facilities, given that he does  not know of a specific gas                                                               
treatment plant that will prepare 600 MMscfd for a gasline.                                                                     
                                                                                                                                
3:47:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS  inquired  whether  In-State  Gas  Project                                                               
personnel  can  talk to  "Exxon"  about  potentially using  Point                                                               
Thomson  gas which  is  superior with  4  percent carbon  dioxide                                                               
instead of 12 percent carbon dioxide and no hydrogen sulfide.                                                                   
                                                                                                                                
MARTY  RUTHERFORD,  Deputy  Commissioner, Department  of  Natural                                                               
Resources (DNR),  responded that Commissioner Irwin  cannot speak                                                               
to this issue  because the Point Thomson unit  has been defaulted                                                               
and  is  in  litigation  before  Judge  Gleason  of  the  [Alaska                                                               
Superior  Court, Third  District].    Settlement discussions  are                                                               
occurring on  the unit issues with  the previous working-interest                                                               
owners.   A second piece  to this  is defaulted leases,  which is                                                               
making its way through the  administrative appeals process and is                                                               
in front  of Commissioner Irwin.   Therefore,  Commissioner Irwin                                                               
cannot be  involved in  any discussion  about either  elements of                                                               
the litigation  discussions.  Because the  question of litigation                                                               
is involved, everyone must take  extreme care when discussing the                                                               
Point  Thomson  area.    However,  there  are  companies  led  by                                                               
"ExxonMobil"  that  are  working  on the  leases  that  they  did                                                               
receive back  from Commissioner Irwin  and they are free  to have                                                               
any discussions they want about those leases.                                                                                   
                                                                                                                                
3:50:01 PM                                                                                                                    
                                                                                                                                
CO-CHAIR NEUMAN asked whether there  have been conversations with                                                               
"Exxon" or any  other producers about in-state use  via a smaller                                                               
diameter gas pipeline.                                                                                                          
                                                                                                                                
MS. RUTHERFORD  said she will  take this question because  it was                                                               
phrased in such  a way that it could involve  Point Thomson.  She                                                               
specified  that  neither  she  nor  Commissioner  Irwin  has  had                                                               
conversations with  any of the  producers about their  ability to                                                               
speak  with   anybody  else   within  the   administration  about                                                               
processing gas  for an in-state  line.   She said she  thinks the                                                               
producers are all free  to do so and she hopes  they do have that                                                               
discussion.   [The  department]  would be  interested in  knowing                                                               
whether there  is capacity within existing  facilities to process                                                               
new  gas, whether  it is  gas  into a  "main line"  or a  "bullet                                                               
line,"  because  [the  department's]   perspective  is  that  the                                                               
capacity within any existing facility is inadequate.                                                                            
                                                                                                                                
CO-CHAIR  NEUMAN said  he believes  these  discussions did  occur                                                               
between producers and Mr. Noah.                                                                                                 
                                                                                                                                
MS.  RUTHERFORD  answered  that   Mr.  Noah  probably  did  those                                                               
discussions, but  she does not  know.  She deferred  the question                                                               
to Mr. Noah.                                                                                                                    
                                                                                                                                
3:52:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   RAMRAS   requested   an   explanation   of   the                                                               
relationship  between DNR  and the  in-state energy  advisor, Mr.                                                               
Therriault,  as  well  as  an  explanation  of  the  relationship                                                               
between the In-State Gas Project and  DNR and Mr. Therriault.  He                                                               
said he is concerned that one  message is being received from DNR                                                               
and another from Mr. Therriault.                                                                                                
                                                                                                                                
COMMISSIONER IRWIN responded  that he was asked  to represent the                                                               
administration and  that he is  speaking for  the administration.                                                               
The relationship with  Mr. Therriault is excellent,  he said, and                                                               
Mr.  Therriault understands  the  requirements  in his  directive                                                               
from the governor, as does  DNR.  [The department] fully supports                                                               
the governor on this and it  fully supports Mr. Therriault.  [The                                                               
department] wants to see all of  this moving forward.  He said he                                                               
trusts that  if Representative Ramras  talks with  Mr. Therriault                                                               
real concurrence will be found.                                                                                                 
                                                                                                                                
3:53:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS said  it was  not.   Mr. Noah  has obvious                                                               
passion for the project and  has resigned out of frustration over                                                               
trying to  advance the project.   Representative  Ramras surmised                                                               
that  because  Mr. Noah  did  not  express frustration  with  the                                                               
governor, his frustration must be with DNR and Mr. Therriault.                                                                  
                                                                                                                                
COMMISSIONER  IRWIN  replied that  he  cannot  put words  in  Mr.                                                               
Noah's mouth.   He said  he supports Mr.  Noah and that  Mr. Noah                                                               
has  done  a  lot  for  Alaska as  both  a  commissioner  and  an                                                               
individual to  advance resource development.   Commissioner Irwin                                                               
stressed that  he, the  governor, and Mr.  Therriault are  all on                                                               
the same page.                                                                                                                  
                                                                                                                                
3:56:22 PM                                                                                                                    
                                                                                                                                
CO-CHAIR NEUMAN  interjected that  it seems  obvious there  was a                                                               
lot of  frustration.   He asked  how things  will be  pulled back                                                               
together.                                                                                                                       
                                                                                                                                
COMMISSIONER IRWIN answered  that he will not duck  what Mr. Noah                                                               
said  today.   He  said  he thinks  there  will  be unanimity  in                                                               
pulling it back together.   While choosing Mr. Noah's replacement                                                               
is not  in his purview,  he is sure the  new person will  be good                                                               
and that the team will be asked  to stay engaged.  Given the many                                                               
technicalities, sensitivities, and  legalities involved, there is                                                               
much internal argument  within DNR, but it  is not disrespectful,                                                               
and  this is  because DNR  cannot afford  to get  it wrong.   "We                                                               
don't agree with folks on things,"  he continued.  He said he has                                                               
felt  all along  that the  "bullet  line" needs  a gas  treatment                                                               
plant (GTP)  because of  what was  learned with  AGIA.   But that                                                               
does not  mean [the department]  is against the "bullet  line" or                                                               
against Mr.  Noah and his team.   It is important  to share ideas                                                               
and argue because these issues  are critical to Alaskans and this                                                               
is promoted  internally within DNR.   He said he wants  people to                                                               
be  able  to  respectfully  disagree   and  present  the  reasons                                                               
supporting  their   positions.     Speaking  for   the  governor,                                                               
Commissioner  Irwin emphasized  that the  governor's support  for                                                               
the "bullet  line" is  shown through his  words and  his proposed                                                               
budget.                                                                                                                         
                                                                                                                                
3:59:34 PM                                                                                                                    
                                                                                                                                
CO-CHAIR JOHNSON said  he believes his constituents  view the in-                                                               
state gas  pipeline as  the number one  priority.   Therefore, he                                                               
thinks it is important to make  a decision on who the new project                                                               
manager  is  and that  this  be  done  quickly  so the  team  and                                                               
momentum can be maintained.   He asked whether Commissioner Irwin                                                               
has any idea as to what the timing might be.                                                                                    
                                                                                                                                
COMMISSIONER IRWIN responded that he  can comfortably say it will                                                               
happen in less  than a month, but looking at  resumes takes time.                                                               
He  said he  trusts  that Co-Chair  Johnson's constituency  wants                                                               
economic,  reliable,  long-term energy  that  jobs  can be  built                                                               
upon, not just a "bullet line."   When the "bullet line" and AGIA                                                               
data  come out  in January  [2010], [the  administration] has  an                                                               
obligation to make sure that Alaskans know the details on this.                                                                 
                                                                                                                                
4:01:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  JOHNSON  agreed  and said  he  appreciates  the  30-day                                                               
comment period.   He expressed  his concern that  the information                                                               
may not  be as solid as  it could be  if a new project  leader is                                                               
not in place by that time.                                                                                                      
                                                                                                                                
COMMISSIONER IRWIN stated  he will relay to the  governor to make                                                               
certain  not  to  lose  the  good people  on  the  project  team.                                                               
Because they  are on contract, this  can be done by  keeping them                                                               
on contract.                                                                                                                    
                                                                                                                                
4:02:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS  inquired  whether Commissioner  Irwin  is                                                               
requiring the project  team to build its own  gas treatment plant                                                               
or   precluding  the   team  from   pursuing  the   existing  gas                                                               
conditioning facility on the North Slope.                                                                                       
                                                                                                                                
COMMISSIONER IRWIN replied  that what has been  learned from AGIA                                                               
is that there  is going to be a need  for these large facilities.                                                               
He said 600 MMscfd is a huge amount  of gas and is a big facility                                                               
and  there  would  be  no  reason not  to  consider  an  existing                                                               
facility if it is there.                                                                                                        
                                                                                                                                
REPRESENTATIVE RAMRAS surmised the  project team can proceed with                                                               
exploring   from  an   engineer's   standpoint,  the   expanding,                                                               
modernizing,  or   augmenting  of  the  existing   gas  treatment                                                               
facility shared by the producers.                                                                                               
                                                                                                                                
COMMISSIONER IRWIN answered,  "Of course, but we  don't see those                                                               
facilities there; we will be interested to hear about them."                                                                    
                                                                                                                                
4:03:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS asked  whether the  in-state gas  pipeline                                                               
team  can  continue  having  meetings  between  commercial  group                                                               
buyers and sellers.   He understood that this  was discouraged by                                                               
someone in the administration.                                                                                                  
                                                                                                                                
COMMISSIONER  IRWIN   responded  that  he  thinks   this  is  the                                                               
governor's call,  but he cannot  answer it too much  because some                                                               
of those buyers and sellers could get to Point Thomson.                                                                         
                                                                                                                                
REPRESENTATIVE  RAMRAS  requested   the  deputy  commissioner  to                                                               
answer his question.                                                                                                            
                                                                                                                                
MS.  RUTHERFORD  replied that  the  decision  as to  whether  the                                                               
coordinator can begin to  facilitate commercial arrangements will                                                               
be made by  the governor's office.  The only  limitation that she                                                               
knows  has  been  placed  on   the  coordinator  is  specifically                                                               
referenced  in the  governor's August  5, 2009,  letter where  he                                                               
states that  any royalty  discussions must  be led  by DNR.   She                                                               
noted that  the project,  as "we" understood  it, was  to analyze                                                               
the  costs, timing,  and costs  schedule for  putting together  a                                                               
project so that it could be  made available to the private sector                                                               
through a  request for proposals (RFP).   Commercial negotiations                                                               
takes  it  a   step  further  and  she  said  she   is  not  that                                                               
knowledgeable about what was intended there.                                                                                    
                                                                                                                                
4:05:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS  reiterated his question as  to whether the                                                               
in-state gas  pipeline team can continue  having meetings between                                                               
commercial group buyers and sellers.                                                                                            
                                                                                                                                
MS. RUTHERFORD repeated she thinks  that is a call the governor's                                                               
office has  to make.   The only limitation  she knows of  is that                                                               
royalty issues must be led by DNR.                                                                                              
                                                                                                                                
REPRESENTATIVE   RAMRAS  inquired   whether  Ms.   Rutherford  is                                                               
speaking for the governor, Mr.  Therriault, or the administration                                                               
right now.                                                                                                                      
                                                                                                                                
MS. RUTHERFORD  said she does  not know  the answer to  that, but                                                               
she does know  that royalty issues are  outside any coordinator's                                                               
purview.                                                                                                                        
                                                                                                                                
4:06:13 PM                                                                                                                    
                                                                                                                                
CO-CHAIR   NEUMAN  asked   whether   the  commissioner   supports                                                               
commercial working groups meeting  with the in-state gas pipeline                                                               
team.                                                                                                                           
                                                                                                                                
COMMISSIONER IRWIN  pointed out  that those kind  of negotiations                                                               
can go  from very innocent  to very detailed.   He said  he would                                                               
support real close  communications with the two  groups - "bullet                                                               
line" and  DNR  - to make sure there is  only one message because                                                               
there could be  something else going on in  that particular world                                                               
with royalty reduction, lease permitting,  and so forth, and care                                                               
must  be taken  not  to cross  lines there.    "We certainly  can                                                               
commit to working with the bullet line team," he said.                                                                          
                                                                                                                                
4:07:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CHENAULT,  in regard to  no net loss for  the Cook                                                               
Inlet, understood the state's position  was that it would support                                                               
"ConocoPhillips" in  filing for an  extension [of its  LNG export                                                               
license] provided "ConocoPhillips" replaced the reserves.                                                                       
                                                                                                                                
COMMISSIONER  IRWIN said  that is  conceptual.   That got  into a                                                               
very detailed, long, projected negotiation  with the parties, and                                                               
all  parties  behaved professionally.    He  said he  thinks  two                                                               
things:  gas for Alaskan  consumption must be protected, and that                                                               
means drilling  and no brown-outs;  and business in the  Kenai is                                                               
wanted.    However,  where  it   goes  is  critical  because  the                                                               
Department  of  Energy  will  also  be looking  at  what  is  the                                                               
depletion rate.                                                                                                                 
                                                                                                                                
4:09:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CHENAULT agreed,  but said he may look  at it from                                                               
the  standpoint  that  the state  held  "ConocoPhillips"  over  a                                                               
barrel when it required the  drilling of seven wells and allowing                                                               
other explorers to put gas into  that facility.  He asked whether                                                               
any explorer other  than "Conoco" or "Marathon" has  put gas into                                                               
that facility since that contract was extended.                                                                                 
                                                                                                                                
COMMISSIONER IRWIN  responded that he  is not aware if  any have.                                                               
He clarified  that those parties  asked [DNR] to get  involved to                                                               
sort  out  all  of  the  issues to  help  get  the  LNG  facility                                                               
permitted again;  so, [DNR]  did not charge  out there  saying it                                                               
wanted to butt in.                                                                                                              
                                                                                                                                
4:10:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CHENAULT  agreed that the  state did help,  but in                                                               
his  opinion the  state threw  in its  support for  the extension                                                               
after ["ConocoPhillips"] agreed to the  seven wells and the other                                                               
explorers.  He said  he likes the idea of no  net loss, except if                                                               
this is  going to be  done to the Cook  Inlet and the  Cook Inlet                                                               
gas supply,  then he  is wondering  what the  effect would  be if                                                               
this was required  of the three big producers on  the North Slope                                                               
to have a no net loss on oil production.                                                                                        
                                                                                                                                
COMMISSIONER IRWIN pointed  out that there is  significant oil on                                                               
the North  Slope for  the refineries, so  the refineries  are not                                                               
being  shorted.   The  issue  with Cook  Inlet  is the  immediate                                                               
concern of  running out  of gas.   To export,  the state  and the                                                               
companies  will  be required  to  ensure  that the  contracts  in                                                               
Anchorage are taken care of first.                                                                                              
                                                                                                                                
4:11:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CHENAULT  agreed that he  does not want  people in                                                               
Anchorage, Fairbanks, or the Kenai Peninsula to run out of gas.                                                                 
                                                                                                                                
COMMISSIONER  IRWIN quipped  that  he thinks  people are  already                                                               
sending emails for Representative Chenault's suggestion.                                                                        
                                                                                                                                
REPRESENTATIVE CHENAULT continued.  No  one wants that gas supply                                                               
to go  away.  The  "LNG plant"  is playing Russian  roulette with                                                               
having to  store gas  for the  winter-time highs.   If  the plant                                                               
goes  away,  so  will  the  production wells,  he  opined.    The                                                               
production  is high  in the  summertime, but  the consumption  is                                                               
not.  While it  as much a short gas supply  in the wintertime, it                                                               
is certainly  a deliverability problem  and not a supply  of gas.                                                               
He is  worried the facility will  be shut down and  that if there                                                               
is not  a gas supply  to bring it back  online in enough  time it                                                               
will be mothballed and another 100  jobs will be lost, along with                                                               
the previous loss  of the 500 "Agrium"  jobs, and it is  due to a                                                               
lack of gas  supply in the Cook Inlet.   Bringing a "bullet line"                                                               
to  the Cook  Inlet  kills  the 500  Cook  Inlet exploration  and                                                               
production jobs.   He has deep concerns about  any exploration in                                                               
Cook Inlet  given the beluga  whales and other concerns  and said                                                               
it will  become harder  to explore  both on  and offshore  in the                                                               
Cook  Inlet.   He will  do  what it  takes to  keep those  people                                                               
working, as well as  to try to take care of  the consumers in the                                                               
state, but it must be remembered that they do go hand-in-hand.                                                                  
                                                                                                                                
4:16:28 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  JOHNSON noted  that he  sent a  letter to  Commissioner                                                               
Irwin on December 7, 2009,  which asked about starting the Alaska                                                               
Oil   and  Gas   Conservation  Commission   (AOGCC)  process   of                                                               
establishing an allowable offtake from Prudhoe Bay.                                                                             
                                                                                                                                
COMMISSIONER IRWIN replied  that the letter was  received and the                                                               
Division of Oil & Gas is working on it.                                                                                         
                                                                                                                                
CO-CHAIR   JOHNSON   asked   for  the   commissioner's   or   the                                                               
department's  position  on  getting  a head  start  on  allowable                                                               
offtake on the North Slope.                                                                                                     
                                                                                                                                
COMMISSIONER IRWIN deferred  to the staff of the  Division of Oil                                                               
&  Gas.    He  said  the question  is  legitimate  and  staff  is                                                               
preparing  a legitimate  answer that  will be  received soon  and                                                               
will be supportable for all parties.                                                                                            
                                                                                                                                
CO-CHAIR  JOHNSON inquired  whether  the  commissioner feels  the                                                               
legislature has standing to request AOGCC to begin that study.                                                                  
                                                                                                                                
COMMISSIONER IRWIN said he does not know the answer to that.                                                                    
                                                                                                                                
4:18:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS  asked  what the  commissioner  or  deputy                                                               
commissioner sees  as the industrial  anchor for a  "bullet line"                                                               
should the "Conoco LNG facility" shut down.                                                                                     
                                                                                                                                
COMMISSIONER IRWIN  answered he  is not  approaching it  that the                                                               
facility  will be  lost.   "Our  goal is  to  keep that  facility                                                               
running and  protect people in  Anchorage," he said.   He spelled                                                               
out what  he would like  to see:   economic energy for  people in                                                               
Anchorage, an LNG  plant that is running at  large volumes, cheap                                                               
energy  for  Eielson Air  Force  Base  and Fort  Wainwright,  and                                                               
conversion from diesel to gas for  the Railbelt.  He said he does                                                               
not know  whether "Agrium" will be  able to come back  because he                                                               
does not know if  the gas can be made cheap  enough for Agrium to                                                               
compete elsewhere  in the  world.  He  recognized that  Fort Knox                                                               
would  not  have  been  possible without  economic  energy.    He                                                               
assured members that he understands  the gravity of the situation                                                               
and  therefore the  programs are  being  worked on  to get  those                                                               
answers as quickly as possible.                                                                                                 
                                                                                                                                
4:19:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS reiterated  his  question in  regard to  a                                                               
potential industrial anchor for a "bullet line."                                                                                
                                                                                                                                
COMMISSIONER IRWIN  deferred an answer  for three weeks  at which                                                               
time  he  will   be  able  to  see  the   projected  numbers  for                                                               
consumption that  are included in  the report  that "TransCanada"                                                               
and "ExxonMobil" file with FERC.                                                                                                
                                                                                                                                
REPRESENTATIVE RAMRAS  stated that adding up  the residential and                                                               
light  commercial  use  does  not  get  anywhere  near  making  a                                                               
reasonably-sized  pipeline  economic  because Eielson  Air  Force                                                               
Base and Fort Wainwright are not industrial anchors.                                                                            
                                                                                                                                
COMMISSIONER IRWIN said  he wants to wait  for the aforementioned                                                               
report.  In  further response, he stated that in  the FERC filing                                                               
the parties are required to  do in-state gas consumption and that                                                               
this is what he wants to look at.                                                                                               
                                                                                                                                
4:22:07 PM                                                                                                                    
                                                                                                                                
CO-CHAIR NEUMAN commented that he  will let the numbers speak for                                                               
themselves.   Maybe there  is no drilling  in Cook  Inlet because                                                               
the producers  want to keep their  gas for 20 years  from now, he                                                               
mused.   He related that  the director of  the Division of  Oil &                                                               
Gas told him that the division  is not doing anything on in-state                                                               
gas because the  concentration is solely on AGIA.   He said he is                                                               
looking  at this  as  a  state-wide energy  plan  with an  energy                                                               
supply for uses all over Alaska,  such as Donlin Creek Gold Mine,                                                               
Red Dog Mine,  Pebble Mine, and opening up mineral-rich  land.  A                                                               
state-wide energy  plan is not  just shipping all of  the state's                                                               
gas outside of  Alaska.  The department is not  talking about how                                                               
to use  the state's resources  to create more jobs  for Alaskans,                                                               
he contended.                                                                                                                   
                                                                                                                                
COMMISSIONER IRWIN  reaffirmed that  he would  like to  meet with                                                               
the aforementioned  folks when Co-Chair  Neuman meets  with them.                                                               
Focus will continue  on AGIA, the "bullet line,"  Cook Inlet, and                                                               
the other things he listed earlier, he said.                                                                                    
                                                                                                                                
4:25:25 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  JOHNSON asked  whether  the FERC  filing includes  such                                                               
things  as a  potential  gas-to-liquids  (GTL) plant,  additional                                                               
export, and  consumption projections, and whether  the state will                                                               
use that  number to play  its own  "what if" games  for projected                                                               
usage as  opposed to what  FERC will approve  as a pipeline.   He                                                               
also asked  what incentive the  [AGIA license holder]  would have                                                               
to go  to FERC with a  consumption report that says  the state is                                                               
going to need 1.0 billion standard  cubic feet per day (Bscfd) of                                                               
gas when  FERC is  going to  say that  the [license  holder] must                                                               
carve that out  of the 3.5-5.5 Bscfd flow in  the "big pipeline."                                                               
Given a low in-state gas  consumption number would make FERC more                                                               
likely  to  issue  the  permit,  the  [AGIA  license  holder]  is                                                               
negatively incentivized to make that number bigger, he opined.                                                                  
                                                                                                                                
4:27:28 PM                                                                                                                    
                                                                                                                                
MS. RUTHERFORD  understood that the  pipeline owners  are playing                                                               
the  "what if"  game in  their analysis  and are  looking at  the                                                               
options available  over time that  might be pursued  for in-state                                                               
gas demand  in the various  regions.  She  has not seen  the most                                                               
current draft of the analysis, but  she is told that that is what                                                               
they will  be accommodating  and that they  will also  be running                                                               
probabilities associated  with those.   In regard to  whether the                                                               
pipeline  owners  would  be  opposed  to  in-state  offtake,  she                                                               
explained that  a specific  provision of AGIA  is for  spur lines                                                               
off  the main  line.   Pipeline  companies make  their money  off                                                               
pipelines and  so the more pipelines  the better.  That  does not                                                               
mean they would want  to see a huge offtake of gas  - such as 1.0                                                               
Bscfd -  which would  change the economics  of the  throughput to                                                               
the North  American market.   However, under  AGIA, [TransCanada]                                                               
had  to accommodate  an  offtake of  up to  a  500 MMscfd  before                                                               
triggering the treble  damages; so that was part of  part of [the                                                               
company's] proposal which  it understood well.  A  "spur line" of                                                               
over 500 MMscfd  that comes off [TransCanada's]  "main line" does                                                               
not trigger the treble damages, she pointed out.                                                                                
                                                                                                                                
4:29:11 PM                                                                                                                    
                                                                                                                                
CO-CHAIR JOHNSON  said he thinks  the state needs to  move sooner                                                               
rather than later  and, therefore, what is being  talked about is                                                               
a "bullet line,"  not a "spur line."  He  reiterated that he does                                                               
not  see  incentive  for  "Exxon"  or  "TransCanada"  to  have  a                                                               
probability study  that is going to  get to the 0.6  Bscfd number                                                               
that Mr. Noah talked about because  it takes the economics out of                                                               
it.    "TransCanada"  testified  that taking  0.5  Bscfd  off  in                                                               
advance might  jeopardize the  project, he  recalled, and  in his                                                               
opinion that is why this is  the magic number that is included in                                                               
AGIA.                                                                                                                           
                                                                                                                                
4:30:15 PM                                                                                                                    
                                                                                                                                
MS.  RUTHERFORD  responded  that  the [AGIA  license  holder]  is                                                               
required to do  an adequate analysis of in-state  demand and this                                                               
will be  reviewed by FERC.   Whether it suits their  economics or                                                               
not,  she said  she believes  [TransCanada] and  "ExxonMobil" are                                                               
committed  to doing  the best  work possible  in determining  the                                                               
growth opportunities for in-state demand.                                                                                       
                                                                                                                                
MS. RUTHERFORD  further noted  that the  LNG export  license runs                                                               
out at  the end of  the first quarter  of 2011.   Should "Conoco"                                                               
and  "Marathon" decide  to  pursue an  extension,  that is  still                                                               
ahead of  the "bullet line" possibility.   It was in  the context                                                               
of  that extension  that she  and Mark  Meyer answered  questions                                                               
from the Anchorage  Daily News and talked about a  no net loss or                                                             
re-establishing the reserve  base so that the  Railbelt, which is                                                               
dependent on  the gas supply out  of the Cook Inlet,  does not go                                                               
dark and  cold in the interim  between when a "bullet  line" or a                                                               
"spur line" is available to replace depleting reserves.                                                                         
                                                                                                                                
4:33:11 PM                                                                                                                    
                                                                                                                                
JOHN  REEVES, Special  Assistant to  the Commissioner,  Office of                                                               
the   Commissioner,  Department   of   Transportation  &   Public                                                               
Facilities (DOT&PF),  noted that  he is  the Alaska  Gas Pipeline                                                               
Transportation Project  coordinator and that [DOT&PF]  is part of                                                               
Mr. Noah's  team; for  example, DOT&PF is  the applicant  for the                                                               
in-state  gasline.   He  became  interested  two years  ago  when                                                               
Governor Palin said maybe the state  should build a gasline if no                                                               
one else does.   He subsequently looked into who  would have this                                                               
statutory authority  and found that  it would be DOT&PF  and this                                                               
was confirmed by  the attorney general.  He helped  to review the                                                               
Request For  Proposals (RFP's)  that Mr.  Noah contracted  out to                                                               
the engineering  firms and  said that DOT&PF  is willing  to help                                                               
other  parties   in  addition  to  Mr.   Noah's  team,  including                                                               
"TransCanada,  Exxon,  Denali  group,  the  ANGDA  group."    The                                                               
problem is that DOT&PF does not  know where the gasline is going,                                                               
which gasline is going to be  built, what supply routes will need                                                               
to be fortified, where the pipe  is coming from and going to, and                                                               
what  size and  how  long  the pipe  is.    [His department]  was                                                               
getting a  pretty good  idea of these  things through  Mr. Noah's                                                               
team and  the speed at  which Mr.  Noah's team was  doing things.                                                               
He said  Mr. Noah is doing  good work and  it is a shame  to lose                                                               
him.   When DOT&PF requested that  it be able to  identify gravel                                                               
sources in  the EIS for use  in the construction of  this gasline                                                               
as  well  as  any  future  gaslines, Mr.  Noah  agreed  and  [the                                                               
department] is  still working on  that.   Mr. Metz just  sent him                                                               
the drill hole data from the pits his firm has checked so far.                                                                  
                                                                                                                                
4:36:44 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  NEUMAN  asked  whether  an  in-state  gas  pipeline  is                                                               
proceeding  along at  a  good  clip and  what  permits have  been                                                               
received at this point.                                                                                                         
                                                                                                                                
MR.  REEVES replied  that [DOT&PF]  has applied  for a  couple of                                                               
permits that started the process with  the EIS.  He said [DOT&PF]                                                               
is available to  provide help for "TransCanada"  and "Exxon" when                                                               
they get  to that point.   Mr. Noah's team is  going more quickly                                                               
and [DOT&PF] was facilitating that by  going as quick as it could                                                               
in  its  role  of  providing  assistance.   He  allowed  that  he                                                               
probably  thinks  an  in-state gasline  is  especially  important                                                               
because he is from Fairbanks.                                                                                                   
                                                                                                                                
4:37:58 PM                                                                                                                    
                                                                                                                                
MR. REEVES, in response to  Co-Chair Johnson, said his opinion is                                                               
that Mr.  Noah is  leaving the project  because he  is incredibly                                                               
frustrated with the project not  moving ahead and maybe even that                                                               
brakes have  been put on  it.   In response to  further questions                                                               
from Co-Chair  Johnson, he  said it  was not  DOT&PF who  put the                                                               
brakes on and  he does not know who did  because Mr. Noah answers                                                               
to  the governor's  office, not  him.   He  added that  it is  no                                                               
accident that DOT&PF  is the applicant.  "If this  is the project                                                               
that gets built before the big line,  then good for us; and if it                                                               
is a  spur line that  comes off  the bigger pipeline,  then we're                                                               
going to  be right there  to help whoever  that is going  be," he                                                               
said.  The gasline was a good idea  at the start and it still is.                                                               
For purposes of  full disclosure, Mr. Reeves said  he chaired the                                                               
Alaska Gasline  Port Authority  for a couple  of years  and still                                                               
thinks the "Valdez project" is the best project.                                                                                
                                                                                                                                
4:40:45 PM                                                                                                                    
                                                                                                                                
MR. REEVES, in response to  Representative Ramras, stated that he                                                               
came to DOT&PF  to help get a  project.  He agreed  that Mr. Noah                                                               
did the same.  He said he  thinks that if this project gets sold,                                                               
DOT&PF  will be  the  one  to sell  it  because  the permits  and                                                               
applications are  in DOT&PF's name.   It is  not hard to  build a                                                               
gas pipeline, he said.   It is not hard to weld  pipe to pipe and                                                               
bury  it in  the  ground.   A  24-inch line  could  be built  [to                                                               
Anchorage] in  two years and a  12-inch line could be  built in a                                                               
year and a half.   An 8-inch line could be  built to Fairbanks in                                                               
less than a year.                                                                                                               
                                                                                                                                
MR. REEVES  noted that  he and Rick  van Nuinheis  (ph) purchased                                                               
the Alaska Gold  Company, which was originally  the United States                                                               
Smelting, Refining, and  Mining Company.  They  split the company                                                               
and he  received the gold  properties in Fairbanks which  are now                                                               
his company called the Fairbanks  Gold Company.  He also received                                                               
the  archives for  the  original  company in  which  he found  an                                                               
extensive  report on  the Railbelt  usage of  gas from  Umiat and                                                               
Gubik prepared by the Alaska  Development Authority in 1954.  The                                                               
report shows how  much oil and gas  is in Umiat and  where.  This                                                               
report concluded that a gasline  should be built to Fairbanks, he                                                               
related,  and at  the  time that  cost was  projected  to be  $16                                                               
million.   This just keeps going  around and around, as  Mr. Noah                                                               
said, and lots of  work has been done it.  It  just boils down to                                                               
deal making, he opined.                                                                                                         
                                                                                                                                
4:46:17 PM                                                                                                                    
                                                                                                                                
MR.  REEVES, in  response to  Co-Chair Neuman,  said he  does not                                                               
support  an in-state  gasline, he  prefers a  gasline to  Valdez;                                                               
however,  he  is  willing  to help  whichever  project  is  going                                                               
forward.   In  further response,  he  agreed that  there are  all                                                               
kinds  of opportunities  for  this gas.   In  regard  to the  0.6                                                               
Bscfd, he  has the same  concerns about possible  treble damages.                                                               
The world has  changed since AGIA was  signed.  He said  he was a                                                               
big  supporter  of  it  when  it  first  came  out,  despite  his                                                               
disappointment of the  port authority being "kicked  to the curb"                                                               
as a  result.   He said  the question he  has is  if it  had been                                                               
known that  "Exxon" was  going to  come along  and take  over the                                                               
"TransCanada" project, Would legislators  have voted to give them                                                               
$500 million  to begin with?   He  offered his assistance  to any                                                               
members requesting it.                                                                                                          
                                                                                                                                
4:49:37 PM                                                                                                                    
                                                                                                                                
CO-CHAIR NEUMAN  inquired whether DOT&PF will  continue moving on                                                               
this project.                                                                                                                   
                                                                                                                                
MR. REEVES answered he cannot look  that far ahead at DOT&PF, but                                                               
he is old  school in getting things  done.  He noted  that in the                                                               
time the  committee met  today, he could  have put  together four                                                               
sections.  The state needs to say do it and just go do it.                                                                      
                                                                                                                                
REPRESENTATIVE RAMRAS  said he shares Mr.  Reeves' sentiments and                                                               
the state should  just build something and he is  for small pipes                                                               
and  small dreams.   A  backward step  was taken  here today,  he                                                               
opined, as  he had  hoped members would  be hearing  about moving                                                               
forward with potential in-state gas usage.                                                                                      
                                                                                                                                
REPRESENTATIVE CHENAULT  commented that he liked  what Mr. Reeves                                                               
had to say.                                                                                                                     
                                                                                                                                
CO-CHAIR NEUMAN thanked Commissioner Irwin and his team.                                                                        
                                                                                                                                
4:53:00 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Resources Standing Committee meeting was adjourned at 4:53 p.m.                                                                 

Document Name Date/Time Subjects
Instate Gasline PresentationLegislature 12 15 09.pdf HRES 12/15/2009 9:00:00 AM
In-State Gas Hearing
Instate Gas PP to Commercial Group 10.28.09.pdf HRES 12/15/2009 9:00:00 AM
November Instate Pipeline Expenditures12 15 09.pdf HRES 12/15/2009 9:00:00 AM
In-State Gas Hearing