Legislature(2015 - 2016)CAPITOL 106
10/29/2015 08:00 AM House RESOURCES
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| Audio | Topic |
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| Presentation: Alaska Gasline Development Corporation | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
October 29, 2015
8:03 a.m.
MEMBERS PRESENT
Representative Benjamin Nageak, Co-Chair
Representative David Talerico, Co-Chair
Representative Mike Hawker, Vice Chair
Representative Bob Herron
Representative Craig Johnson
Representative Kurt Olson
Representative Paul Seaton
Representative Andy Josephson
Representative Geran Tarr
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Shelley Hughes
Representative Gabrielle LeDoux
Representative Scott Kawasaki
Representative Cathy Tilton
Representative Mike Chenault
COMMITTEE CALENDAR
PRESENTATION: ALASKA GASLINE DEVELOPMENT CORPORATION
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
FRANK RICHARDS, P.E., Vice President
Engineering & Program Management
Alaska Gasline Development Corporation (AGDC)
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Testified during the presentation of the
Alaska Gasline Development Corporation.
JOE DUBLER, Vice President
Commercial Operations
Alaska Gasline Development Corporation (AGDC)
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Testified during the presentation of the
Alaska Gasline Development Corporation.
DAN FAUSKE, President
Alaska Gasline Development Corporation (AGDC)
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Answered questions via teleconference
during the presentation of the Alaska Gasline Development
Corporation.
JERRY JUDAY, Assistant Attorney General
Labor and State Affairs Section
Civil Division (Anchorage)
Department of Law (DOL)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the presentation
of the Alaska Gasline Development Corporation.
FRITZ KRUSEN, Vice President
Alaska Liquefied Natural Gas (AK LNG) Project
Alaska Gasline Development Corporation (AGDC)
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the presentation
of the Alaska Gasline Development Corporation.
BRUCE TANGEMAN, Vice President
Administration & Finance
Alaska Gasline Development Corporation (AGDC)
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Answered questions via teleconference
during the presentation of the Alaska Gasline Development
Corporation.
ACTION NARRATIVE
8:03:07 AM
CO-CHAIR BENJAMIN NAGEAK called the House Resources Standing
Committee meeting to order at 8:03 a.m. Representatives Seaton,
Josephson, Tarr, Herron, Hawker, Johnson, Talerico, and Nageak
were present at the call to order. Representative Olson arrived
as the meeting was in progress.
^PRESENTATION: Alaska Gasline Development Corporation
PRESENTATION: Alaska Gasline Development Corporation
8:03:58 AM
REPRESENTATIVE NAGEAK announced that the only order of business
would be the presentation of the Alaska Gasline Development
Corporation.
8:05:04 AM
FRANK RICHARDS, P.E., Vice President, Engineering & Program
Management, Alaska Gasline Development Corporation (AGDC),
Department of Commerce, Community & Economic Development
(DCCED), began a PowerPoint presentation. He directed attention
to slide 2: "State's Objectives." He stated that AGDC was
created by the legislature to work toward the goals of the state
to provide stable, affordable, long-term energy, along with
commercialization of the state's vast natural resources -
specifically natural gas from the North Slope. The overall goal
is to maximize those resources in order to bring in revenue to
the state treasury. As those projects are developed, they would
ultimately facilitate more oil and gas development across the
North Slope and Alaska. He stated that those were the
parameters provided to AGDC in moving forward as an
organization.
MR. RICHARDS directed attention to slide 3: "AGDC Origins." He
said the legislature's creation of AGDC was in response to
concerns over the declining Cook Inlet gas reserves and supplies
that would feed into the existing power generation/home heating
needs of Southcentral Alaska, along with the needs of Interior
Alaska - primarily Fairbanks and the Fairbanks North Star
Borough (FNSB). He said [the concerns] were heightened by the
brownout practices that were conducted by then Mayor Sullivan,
which resulted in an outcry from the public to ensure there
would be a long-term supply available to cover the needs of
Southcentral Alaska and other Alaskans.
MR. RICHARDS stated that another purpose in forming AGDC was to
address health concerns related to air quality affected by the
use of wood and coal as a heat source, particularly in the
wintertime. The introduction of potentially less particulate-
laden heating sources would help alleviate some of those health
concerns. He said collectively, there is a sense of urgency to
get North Slope natural gas to Alaskans, and there is an
estimated 33 trillion cubic feet of proven natural gas reserves
[on the North Slope], which he characterized as a tremendous
resource from which Alaska could benefit.
8:08:34 AM
MR. RICHARDS directed attention to slide 4: "Alaska LNG Project
Development." He said in 2011, the governor called for a joint
effort by North Slope producers to explore liquefied natural gas
(LNG) export as an alternative to the overland route that was
going to take North Slope resources through Canada to the Lower
48. [In 2013], concept selection was completed, and Nikiski was
announced as the lead site for an LNG facility, and at that
time, heads of agreement were negotiated between the producer
parties and the state. In 2014, participation by AGDC in the
Alaska Liquefied Natural Gas (AK LNG) Project was authorized
under SB 138, and with that the joint venture agreements (JVAs)
were executed and the pre-front end engineering and design
("Pre-FEED") efforts were initiated. He said this is an
iteration where Alaska "shifted from an overland route to an LNG
solely within Alaska, under the ... confines of the Alaska LNG
Project." The ultimate goal is to commercialize those
tremendous resources and provide long-term fiscal stability for
Alaska.
8:10:03 AM
JOE DUBLER, Vice President, Commercial Operations, Alaska
Gasline Development Corporation (AGDC), Department of Commerce,
Community & Economic Development (DCCED), directed attention to
slide 5 of the PowerPoint presentation: "Authority Granted in
SB 138." He said under SB 138, AGDC would have the primary
responsibility for developing the AK LNG Project on the state's
behalf. He noted that the statutory references are included in
the hard copy of the presentation, included in the committee
packet. He said AGDC may acquire a direct ownership interest in
any component of the AK LNG project. He noted that there had
been some question during a meeting prior to this as to whether
the corporation was authorized to participate in the mid-stream
portion currently held by TransCanada (TC), and he said the
attorney general has put out a letter that states that AGDC can
do that. He related that AGDC may enter into contracts related
to treating, transporting, liquefying, or marketing gas - in
consultation with the Department of Natural Resources (DNR) and
the Department of Revenue (DOR). Further, AGDC shall assist DNR
and DOR to help those entities: maximize the value of the
state's gas resources; provide economic benefits in the state;
and provide revenue to the state.
8:11:35 AM
REPRESENTAIVE HAWKER, regarding the authority granted under SB
138 - which he noted was within [AS 31.25.005] - and the issue
of having primary responsibility for developing the AK LNG
Project, asked if AGDC was really operating in the primary
capacity or if it had been "given and relegated a subsidiary
role." He said, "I think we envisioned you having a primary
role." He indicated there was debate around [the capitol] as to
whether AGDC was really taking the lead on the projects or
"following direction." He asked who else might have taken on
that role if AGDC had not.
8:12:58 AM
MR. DUBLER deferred to Dan Fauske.
8:13:09 AM
DAN FAUSKE, President, Alaska Gasline Development Corporation
(AGDC), Department of Commerce, Community & Economic Development
(DCCED), said AGDC certainly works in concert with DNR, the
administration, DOR, the Department of Labor (DOL), the
Department of Transportation & Public Facilities (DOT&PF), and
the Department of Law (DOL), as well as others. He said there
are areas in which AGDC has direct involvement, because "it's a
direct function of the corporation." It manages through the
board and dispatches the work by assigning it to people. He
mentioned there are areas where there is a natural "crossover."
He referenced the governor of Alaska and said, "This is his bill
going forward." He reiterated that AGDC works DOR and DNR, but
emphasized that at this juncture it is working more with DNR via
meetings where AGDC and DNR share personnel, ideas, and
information. He said AGDC tries to "stay within our lane,"
while working with other entities, and "function in those areas
that we've been charged to do by the legislature, through the
law, and then certainly the executive branch of government ...."
He relayed there is always tension, but said that is not a
criticism, but is just a reality of the functions that people
have. He said he thinks it is good tension. He said the
project may not be moving forward as fast as some would like,
but he thinks progress is being made.
8:15:32 AM
REPRESENTATIVE HAWKER asked if he should be concerned that Mr.
Fauske had not responded to his question by coming right out and
affirming that AGDC is fulfilling the legislature's statutory
direction and does have primary responsibility and is operating
in that capacity. He said it seemed that Mr. Fauske avoided a
direct answer to his question and instead talked about all the
other entities that are influencing AGDC's decisions and
operations. He acknowledged that AGDC would always have a
symbiotic relationship with those agencies, but he expressed
concern that the intent of the legislature in creating AGDC is
being "overrun by events."
MR. FAUSKI stated that he does believe that AGDC is fulfilling
the statutory mandate. He said he thinks AGDC is in the
position to carry out a mandate. He asked Representative Hawker
if he could be more specific about the issues that he indicated
he had heard.
REPRESENTATIVE HAWKER said he was certain there would be more
questions as the presentation continued.
8:16:56 AM
REPRESENTATIVE HERRON offered his understanding that since the
passage of SB 138, AGDC has requested more specificity in the
statute related to the responsibilities that it has been given
by the legislature. He asked Mr. Fauske if he believes the
legislature should revisit those statutes and revise them in an
attempt to clarify those responsibilities.
MR. FAUSKE responded that a person could always go back and find
things that could have been done differently. He said he thinks
AGDC is working within the parameters established under SB 138,
and he said that at this point, he would hesitate stating
anything specific that needed to be changed. He indicated that
there had been a lot of news related to the corporation and the
work that it is getting done. He stated that AGDC has been able
to get its work done under the current arrangement; therefore,
he said he would offer no changes at the current time.
REPRESENTATIVE HERRON said he believes Mr. Fauske that the
statutes allow him to do his job. Nevertheless, he questioned
whether - since the passage of SB 138 - the corporation had
thought of any changes [to statute] that would allow it to do
its job better. He asked, "Has there been a desire to make some
changes by the corporation, in conversations with any legislator
or the administration?"
8:19:50 AM
MR. FAUSKE answered there had been ideas that had been
"floated." He said board selections and how the members serve
is an issue. He said the commissioners on the board have
functioned well. He stated that the most apparent issue is
marketing: AGDC has not budgeted for marketing, though people
have assumed it has. He said DNR has "clearly staked out an
area for marketing," which he said he does not find problematic,
but it has been discussed back and forth where that function
should reside. He said there have been legal issues: On the
Alaska Stand Alone Pipeline (ASAP) side there is independent
representation, whereas AGDC is represented by the Office of the
Attorney General. He said that creates tension, but works fine.
He said those are things that have been discussed and could be
changed; although AGDC is not advocating for that change.
8:22:11 AM
REPRESENTATIVE HERRON stated his understanding that the attorney
general was not available to take part in the meeting; however,
there was an assistant attorney general available.
CO-CHAIR NAGEAK noted that Assistant Attorney General Jerry
Juday was available via teleconference.
REPRESENTATIVE HERRON suggested he may have some questions for
Mr. Juday.
8:22:56 AM
REPRESENTATIVE JOHNSON directed attention to slide 5, and he
observed that the only "shall" listed under the authorities
granted AGDC was in terms of AGDC assisting DNR and DOR. The
other authorities, he said, are listed as "may acquire"
[ownership interest] and "may enter into contracts". He asked,
"If you don't, who would?"
8:23:28 AM
MR. DUBLER responded that if AGDC had been directed that it
shall acquire a direct ownership interest in any component of
the AK LNG Project, then if there was no AK LNG Project, it
would make it difficult for AGDC to fulfill that statutory
obligation. He said he believes that is why the permissive
["may"] was used there. In response to Representative Johnson's
question, he said he does not know who would do it if AGDC did
not, because he believes that AGDC is the only entity with the
statutory authority to do so.
REPRESENTATIVE JOHNSON asked, "Are you sure you have statutory
ability to do that?"
MR. DUBLER answered that he believes AGDC does.
REPRESENTATIVE JOHNSON asked Mr. Dubler if he does not think
that DNR or DOR could "assume the duties." He specified that he
was talking about the transfer of TC, if Alaska decides to sever
the relationship with TC. He reiterated that the aforementioned
"may" would allow someone else to take over those duties.
MR. DUBLER replied that he does not know the particulars of the
deal that the state has with TC, because that is a contract that
DNR has with TC; therefore, he cannot speak to who the intended
recipient is, but AGDC has been told it is the chosen entity.
He added, "And I have no reason to doubt that."
REPRESENTATIVE JOHNSON asked Mr. Fauske, "Are you in charge?"
MR. FAUSKE answered, "I'm in charge of Alaska Gasline
Development Corporation." Inquiring whether Representative
Johnson's question had been asked in a broader sense, he
clarified that he is not in charge of the AK LNG team or the
overall [project], but is "a member of it" and is in charge of
"the functions that we have going forward."
8:25:53 AM
REPRESENTATIVE HAWKER, building on the previous comments of
Representative Herron, echoed the question asked by
Representative Johnson: Who is running the show? He said there
is a great deal of concern over "who is doing what at what part
of the project." He said DOR and DNR have constitutional and
strict statutory responsibilities in Alaska. He recollected
that Mr. Fauske had said he did not see the need to clarify more
roles for AGDC, but he questioned if the legislature should be
trying to clarify "the whole road map" by "better delineating
and defining the roles and responsibilities" of the various
agencies. He said in making a business work, responsibilities
must be fixed, tasks must be assigned to the people who have the
responsibility of fulfilling those responsibilities, and then
the performance of those people in achieving those specific
tasks must be graded. He said he thinks "we" do not know who
has what task and, thus, who to hold responsible. He reiterated
his question as to whether the legislature should clarify the
responsibilities of all the agencies.
8:27:40 AM
MR. FAUSKE said that is a good question, which he indicated has
been discussed in testimony and some of the debate that has
occurred. He stated a need for alignment, which he indicated
the state is attempting to achieve through legislation to figure
out the roles of all involved. He listed some of the functions
of AGDC from a technical [standpoint], including the Project
Steering Committee (PSC), the Management Committee (ManCom), and
the sponsor group, and said AGDC works with various agencies and
works to develop "those areas where we work." He said better
clarification is needed as to the function of each entity,
because there always seems to be "mission creep." He said,
"Good or bad, it can cause confusion." He said clear
delineation in the assignment of duties would not only help
immensely, but would also send a great message to the industry
as Alaska negotiates very complex, commercial contracts and gas
balancing. He said the management of the resource and the gas
balancing is a producer function, but DNR has a difficult role
in that mission. He further suggested either removing some of
the bureaucracy or establishing an organization that fits within
a larger organization - the entire state umbrella as an equity
partner in the project - to produce at maximum output to get the
work done. He said, "Time is a killer on these projects." He
recollected that he had heard testifiers and officials state
that they wish things could be going faster. He talked about
meeting assignments and benchmarks to coincide with the
industry.
8:30:38 AM
REPRESENTATIVE HAWKER said one point Mr. Fauske had made that
resonated with him was regarding the need for additional
clarification for the purpose of alignment and keeping the
project on track as a means of enhancing productivity. He said
that sounds like Mr. Faust is able to see inefficiencies that
have "crept into the process" that were created by the
legislature. He asked if Mr. Faust could offer an example of
which inefficiencies the legislature could address.
MR. FAUSKE responded that some inefficiencies are natural. He
expressed pride in the speed at which AGDC had been [formed],
but said the corporation has "a lot of hoops to jump through."
The same is true for DNR, he said. He related one inefficiency
is when AGDC is not used to its full capacity in terms of its
technical side. He said he sees duplication of services that he
finds unnecessary. He said he was not being critical, but was
responding as a manager that sees areas where things could be
done better. He stated his belief in small assignments, with
small functionality, with top-notch people completing them. He
opined that at times, the state has a tendency to assign too
many people to a function. He said he thinks that organizations
need to morph as they go along and fix those things that are not
working to maximum capacity. He said the legislature has been
gracious to AGDC and DNR, because "we all want the same thing."
He said he thinks that needs to be realized, and he reiterated
the need to "keep the momentum going forward."
MR. FAUSKE, in response to Representative Hawker, said both AGDC
and DNR have top-notch engineers, and he opined that the two
should be working together, rather than work as separate
entities, holding separate meetings. He explained, "We're
trying to keep pace with industries that are putting their top-
notch people on specific items, and I think the state should
respond in kind." He said the state has those people available
in AGDC, DNR, and DOR, but they need to be aligned. He said he
gets frustrated when he goes to meetings, because all the people
there are good people, but there are just so many of them. He
questioned whether the right people are being assigned to the
right tasks. He advised it is possible to do this.
8:36:17 AM
REPRESENTATIVE HAWKER asked Mr. Faust if there is anyone who is
in a position of authority over all aspects of the project that
can address the problem Mr. Fauske is describing.
MR. FAUSKE answered that he believes there is.
REPRESENTATIVE HAWKER asked who?
MR. FAUSKE talked about the possibility of the entities
admitting they could be better at their functions and mentioned
"taking this on up the chain." He said he does not expect the
governor, who is actively involved, to be at meetings, but said
he is trying to "deflect from that to an individual ... or an
agency that is monitoring the work product that is going
forward." He explained he means to clearly establish tasks and
assignments with timeframes attached." He said the governor is
in charge, but offered his understanding that Representative
Hawker is seeking out: "How does the function move forward."
He mentioned Regan Boikin (ph), whom he said is the liaison
between AGDC and the Office of the Governor and the gasline
team. He mentioned Ethan McAllister (ph) in conjunction with
coordination between DNR, DOR, the sponsor group, and ManCom.
He said, "There is no clear picture."
8:38:48 AM
REPRESENTATIVE HAWKER offered his understanding that Mr. Fauske
was saying that there is no one in a state organization that is
in charge of this project. He said the only name that keeps
coming up is the governor of Alaska. He said if that is the
case, maybe the legislature should be talking to Governor Walker
to find out what is going on. He stated, "Apparently there is
no one at the State of Alaska working in this administration who
has the ability to coordinate interagency operations on this
project. That scares the bejeebers out of me."
8:39:30 AM
MR. FAUSKE emphasized that a lot of people are working in
concert to "get that message up to the governor." There is
coordination through different agencies, and the attorney
general is heavily involved and doing a good job in "trying to
coordinate the activities and the flow of information." A
negotiating team is currently in place. Notwithstanding that,
he opined that there needs to be a clearer answer as to how
"this function is working." He said he thinks it is imperative
that he and his colleagues in the other state agencies and in
the Office of the Governor come up with a way to deliver this
message as to "how this commanding control system works." He
indicated that he understands [the concern of] legislators,
because there is a lot of money involved in such a project. He
said he would sit down with his colleagues to find a better
answer to the question.
8:41:06 AM
REPRESENTATIVE OLSON directed attention to two organizational
charts in the committee packet: [One labeled, "State of Alaska
AKLNG Integrated State Gas Team 10.26.15"; another labeled,
"State of Alaska FY 2017 Governor Organizational Chart
Department of Commerce, Community and Economic Development
Alaska Gasline Development Corporation (AGDC) & Alaska LNG
Participation (combined)." He noted that for the most part, the
charts are missing the names of the people who hold the
positions listed. He remarked that with all the turnover that
"both organizations" have had in the last few months, it is not
so helpful to see a chart of vacant position control numbers
(PCNs).
MR. FAUSKE asked if Representative Olson was referring to charts
from AGDC or DNR.
REPRESENTATIVE OLSON responded, "I can't tell where they came
from. Today's the first day I saw them."
MR. FAUSKE said AGDC could provide the information from its own
chart to the committee "in just a few seconds"; however, the
other chart was not created by AGDC. He indicated that the
makers of the other chart had been asked in another hearing the
day before to "come back with that."
REPRESENTATIVE OLSON noted that the other chart was produced by
the Department of Commerce, Community & Economic Development.
He offered his understanding that Mr. Dubler had nodded his head
in recognition.
8:42:44 AM
REPRESENTATIVE TARR, referring to slide 5, "Authority Granted in
SB 138," highlighted AS 31.25.005(1), which read as follows:
(1) develop and have primary responsibility for
developing natural gas pipelines, an Alaska liquefied
natural gas project, and other transportation
mechanisms to deliver natural gas in-state for the
maximum benefit of the people of the state;
REPRESENTATIVE TARR also highlighted AS 31.25.005(2) and (3),
which are summarized on slide 5 as saying that AGDC shall assist
DNR & DOR, as follows:
Maximize the value of the state's gas resources
Provide economic benefits in the state
Provide revenue to the state
REPRESENTATIVE TARR opined that that language makes clear the
responsibility of AGDC and that "they'll have those lead roles."
She said the fact that AGDC just completed work on ASAP gives
her cause to believe that the corporation was able to "get
through that process and bring the right team of people
together." She recollected that Mr. Fauske, at a hearing
yesterday, had mentioned there were about 138 people on one of
the project management teams. She questioned if, for this major
undertaking, "some of this can easily be worked out without
legislation, so long as the people involved really have that
commitment to ... sit down at a table and iron it out." She
asked Mr. Fauske if [doing so] is a natural occurrence for such
a major undertaking. She recollected that AGDC was supposed to
be a "lean operation"; however, the transition of taking over
for TC would require additional staff. She said that changes
AGDC's role to being involved in all parts of the project - not
just the downstream part. She explained she is trying to
understand the context of the transition and whether Mr. Fauske
thinks legislative involvement is necessary.
8:44:44 AM
MR.FAUSKE said AGDC does not have 138 positions "listed out."
He said there are currently 22 people working for AGDC; the
legislature authorized up to 38 PCNs. He said AGDC pledged not
to "create a bureaucracy that needs to be fed on an annual
basis." He said AGDC has a strict, structured objective and
plan to function as a private entity enterprise, in the sense
that it will keep full-time employees to a limit and utilize
expertise through a system of managing subject matter experts
(SMEs) that will be brought in to focus on a particular task and
leave when it is done. He opined that is the way to streamline
operations and be efficient and effective. He said that was the
mandate AGDC was given, but some other agencies were given
different mandates and have different needs and requirements.
He said he supports those other agencies in that, and "they need
to come forward and explain that."
MR. FAUSKE said during the testimony yesterday, Mr. Lee, from
TC, for whom he expressed his appreciation, shared that TC
currently has 15 employees on the project: 12 technical and 3
administrative. If the legislature passes "this bill" and the
functions of TC are brought over to the AGDC, the corporation
would be in the position to negotiate with TC to hire some or
all of its experts to assist through the process. He said they
would be experts that could be utilized for particular parts of
the project. He said that is AGDC's functionality, which he
opined would and should not change. He said that's where he
thinks AGDC brings something to the table and where the writers
of the legislation recognized the need to "create something that
can operate like that." He reemphasized his belief in
maximizing functionality. He indicated that some of the
upcoming slides in the presentation would illustrate his point.
8:48:56 AM
REPRESENTATIVE JOSEPHSON asked Mr. Fauske to compare his
comments about efficiency and there being "too many people" to
the implication made at the aforementioned hearing yesterday
that the state should not buy out TC, because it just did not
have sufficient talent and staff. He said it could be that
"there are two different types of staffing or subject matter
going on."
MR. FAUSKE responded that he did not recall a comment regarding
not having enough staff. He said, "What we're referring to is
the expertise." He indicated the expertise housed within AGDC
comes from those seconded experts made available to the
corporation for specific tasks. He expressed confidence in the
capabilities of these individuals to operate in "a function that
goes forward." He clarified that AGDC is not asking for "a
great deal of personnel coming in," but for - "if this goes" -
the money needed to bring on experts necessary "to finish the
specific function that's being laid out, with the appropriation
requests and the timeframes being allocated to get us to that
place," as well as the capability to make the front end
engineering and design (FEED) decision.
REPRESENTATIVE JOSEPHSON said Mr. Lee had stated emphatically
that if this appropriation does not occur - if SB 138 dies - AK
LNG would "wrap up." He asked Mr. Fauske if he agrees.
MR. FAUSKE answered that within the appropriation under SB 138
is funding for the work program & budget (WP&B), which would
have to be decided on December 4, [2015]. He offered his
understanding that Mr. Lee was saying that if that is funded,
the project would potentially die, because under the current
system, "we'd have 30 days, maybe a little bit more, to wrap it
down and stand down the various entities that are working." He
emphasized the criticalness of that budget to the project moving
forward.
8:53:07 AM
REPRESENTATIVE SEATON referenced the aforementioned issue of
"may" and "shall" on slide 5, and he said he is hearing that
there are problems. He asked if AGDC does not have the ability
to use [transferred] employees or to enter into contract on
projects where employees are transferred from both agencies,
whether from DOR, DNR, or other entities.
8:53:49 AM
MR. DUBLER responded that AGDC does have the ability to second
employees into the project. He explained the reason none of its
current employees are currently [transferred] in to the project
is because when [AGDC] began the project in July 2014, it was
going full speed on ASAP and trying to wrap up the feed effort
there, so all its people were working on that project, which has
since been curtailed. Those assets have been freed up to be
applied to the AK LNG project. He stated that to the extent
there are vacancies in the future, AGDC would certainly be able
to second employees into that project, and some of those
vacancies could be from "an exit of TransCanada employees."
REPRESENTATIVE SEATON noted that engineering, gas balancing, and
marketing had been discussed. He referred again to slide 5,
where it states that AGDC "may enter into contracts," and he
asked if it is AGDC's wish that the legislature micromanage who
is in charge of which projects and who will head which functions
within the state gasline team or within the sponsor group.
8:56:05 AM
MR. FAUSKE responded that he is not advocating for
micromanagement, but he wants clear discussion as to what is
expected of AGDC in order to get a job done. He advocated
working with AGDC's colleagues and the Office of the Governor -
a key player in this endeavor. He further advocated for AGDC
managing itself in a manner to get the task done. He said he
does not think it is necessary for the legislature to designate
specific functions, which he said are already in place, in terms
of the role and various aspects of DNR and DOR. He opined that
[the agencies] need to come together to move the process
forward. He reiterated the need for clear definitions, keeping
people in their "lanes," and outlining timeframes for
efficiency, without "mirroring the activities of others," and
hiring experts. He said he thinks the governor is fully capable
of assigning people within divisions. He talked about allowing
for clear messages from the legislature and the people of the
state, as to what they expect. He acknowledged that money is
"tight," and said he thinks that is "a mandate all of us
understand." He said he has heard "a thousand times" about
Alaskans' hesitancy in government involvement, and he said he
has to remind people that AGDC is advocating possible oversight
of the people that would be [working on the project]. He said
he thinks government money spent wisely and efficiently in this
endeavor benefits everyone.
8:59:11 AM
REPRESENTATIVE SEATON said he does not understand how the
legislature would accomplish what Mr. Fauske is talking about,
unless it assigns to AGDC or another entity the specific control
of aspects of this project. He said the aforementioned statute,
shown on slide 5, states that AGDC "shall assist DNR & DOR" in
certain efforts and "may" enter into contract. He said he does
not see how the legislature would accomplish "the alignment
beyond where we get with the sponsor's group, the state team
group, [and] your authorities here." He asked Mr. Fauske what
language he suggests the legislature create that would not be
about "going in and managing" who is going to be in charge of
each specific detail," while maintaining the flexibility to
react to things. He said there is a gasline team that is
supposed to be making those decisions. He said he thinks it
would be an inappropriate role for AGDC to be in charge of gas
balancing contracts, but asked how, for example, the legislature
would give that assignment to AGDC without "making things rigid
that are not going to be able to change with the project in
legislation." He said he hears that it would nice if everyone
was cooperating, but wants to hear from Mr. Fauske what changes
to law the legislature could proposed to accomplish that.
9:01:03 AM
MR. FAUSKE asked for some time to formulate an answer.
REPRESENTATIVE SEATON told Co-Chair Nageak that would be fine
with him.
9:01:54 AM
REPRESENTATIVE HAWKER commended Representative Seaton for
bringing up points he had wanted to make. Regarding the purpose
of the third special session, he stated that under statutes
previously passed, the legislature gave the executive branch the
authority to terminate the relationship with TC; therefore, the
decision whether or not to carry out that termination is not one
for the legislature to make. The decision was made solely by
the governor, and given that he has, the legislature must
appropriate the money the state needs to "go it alone." He said
the state must pay off its obligations to TC, but most
importantly, must come up with the money to pay the people
running the project and direct those people to go forward. He
said the question to ask is whether Alaska is prepared to handle
the project on its own.
REPRESENTATIVE HAWKER offered his understanding that Mr. Fauske
had expressed a lot of frustration that the state lacks the
efficiency to move the project forward. He emphasized that that
gives him a great deal of concern, because the smallest check
that would be written for this project is $150 million;
therefore, it is critical that the state gets it right. He
surmised that Mr. Fauske may have negative feedback from people
"for even talking about this with us." He said he sees a fight
for control among AGDC, which is doing what the legislature
instructed it to do; the attorney general, to which the
legislature gave a specific, minimal role, but whom
Representative Hawker said he hears sometimes is "running the
whole show"; DNR, which he said he heard has hired engineers in
duplication of the work of AGDC; and the role of Mr. Boikin,
which is referred to but not defined. He asked Mr. Fauske if
these competing interests should be cause for his concern.
9:05:13 AM
MR. FAUSKE said Representative Hawker is "hitting the nail on
the head." He indicated that Mr. Boikin may be a mystery, but
said he has enjoyed working with him. He said there had been an
organizational chart, which he was asked to speak about, without
first having been given the chance to see it and offer input on
it, and he said that was frustrating. He remarked that events
like that are what cause people to question who is charge.
9:06:12 AM
REPRESENTATIVE HAWKER read the first bullet point on slide 5, as
follows: "AGDC has primary responsibility for developing [an]
Alaska LNG project on the state's behalf." He said it sounds
like AGDC is, in fact, not being vested with that primary
responsibility.
MR. FAUSKE responded, "That is clear."
9:06:49 AM
CO-CHAIR NAGEAK said, "... It seems like everybody's got their
hand in the pie." He emphasized the need to ensure that AGDC
maintains the leadership role given to it by the legislature,
and all other entities should "stand in line" and state how they
can help the process. He noted that the committee meeting had
reached an hour thus far, during which the members of the
committee had expressed their frustration. He stated the need
to "go forward" and let AGDC do its job.
9:08:24 AM
REPRESENTATIVE JOSEPHSON said he hears Mr. Fauske's frustration
and concern. He opined that the request for an organizational
chart is valid. He continued as follows:
... I'm not here to defend Mr. Boikin - I don't know
him very well - but I think even these gentlemen would
agree that there was going to be a negotiator for
these deals from the governor's office, and it's
reasonable that there would be an individual call for
chief negotiator. Representative Hawker said we're
not sure what his role is. That was clarified at the
September hearing in Palmer: he's the chief
negotiator.
The other thing is: I agree that the statute isn't
all that clear. For example - I'm not saying it needs
to change; I'm not making that point - but it says
that there will be consultation in subsection (24) of
.080 with the commissioners of Revenue and Natural
Resources, about the fundamental parts of everything
AK LNG is supposed to do. I don't know what that
means. Does that mean they have a cup of coffee?
Does it mean that DNR and DOR can ... provide, sort
of, input that's obligatory or mandatory? It's not
clear, but ... consultation's a pretty ... serious
word.
So, I agree that some of this needs to be ironed out,
but I guess I mostly wanted to make those comments...
9:10:16 AM
CO-CHAIR NAGEAK interjected that "all of us" have been involved
with organizational business for a long time and know how it
works. He said when someone is in charge, there are people at
the top in other agencies that will be brought in for council.
He opined that in this case, AGDC takes the role of the entity
in charge.
REPRESENTATIVE JOSEPHSON responded that in a sense, this issue
gets down to something as fundamental as the formation of the
country. He explained that "we" want one entity to be the
decider, because that is streamlining - it is efficient - but
the fear that is ever present is that there needs to be some
"check" on that given power. Without that, there is no balance.
He said, "I think that's the delicacy we're trying to deal with
to some degree."
9:11:48 AM
MR. DUBLER continued with the PowerPoint presentation. He
brought attention to slide 6: "AGDC's Role in Alaska LNG." He
said AGDC is a signatory to the Joint Venture Agreement (JVA)
governing the AK LNG Project. He said that is the agreement for
the venture in the Pre-FEED phase of the project. He said the
corporation also holds the state's 25 percent equity interest in
the LNG facility - the downstream component - of the project.
He said AGDC is a member of the sponsor group, on which Mr.
Fauske sits; ManCom, on which he, himself, sits; and PSC, on
which Fritz Krusen, the vice president of AGDC sits. Through
those committees, AGDC participates in integrated end segment
decisions, for example, the work program and budget decisions
for the year. He said AGDC, with the assistance of outside
counsel, also participates in commercial negotiations for
governance and commercial issues related to the project. He
said the assistant attorney general has been assigned to the
corporation. Mr. Dubler said AGDC has planned and developed
off-takes for in-state gas deliveries. The [PSC] has done the
technical work, while the commercial group has done analysis
related to the communities along the route, and the anticipated
cost would be to get gas to "a given size community."
9:13:51 AM
REPRESENTATIVE TARR suggested the fact that AGDC is the
signatory to the JVA clarifies, at least in the case of the Pre-
FEED stage, each organization's role. She said it gives her
some comfort to know that in some areas, things are still being
worked out, but "here, it's very clear ... how we can
successfully participate in this phase of the project, and so
long as we can get our ducks in a row." She asked Mr. Dubler if
that sounds like a fair assessment, that there is some
infrastructure and legally binding, agreed-upon set of
parameters that are used for the Pre-FEED phase.
MR. DUBLER answered in the affirmative, but added, "It's not as
straightforward as you would think." He explained as follows:
In the case of the state's role in the project, ...
the state's interest is 25 percent; it's represented
by AGDC in the downstream and TransCanada in the
midstream. And so, the voting is ... very clear on
segment issues, where ... if it's related only to the
LNG project, AGDC would have the vote on that. If
it's ... related to the pipeline or the ... gas
treatment plant, TransCanada would have the vote on
that. It's on an integrated vote that effects the
entire project ... that can lead to a ...
misalignment, I guess is the best word, between the
parties. If TransCanada - and this hasn't occurred
yet, but the potential down the road is for this to
happen - if TransCanada disagrees with the state on a
vote, how that vote gets cast ... for the state's 25
percent interest still hasn't been resolved. ... And
we've been working on it; it's a very difficult issue
for both entities, because the state, of course,
believes - ... and in my opinion, rightfully so - that
it's their 25 percent, so their vote should be the one
that counts. And, you know, from TransCanada's
standpoint - and ... I will not speak for TransCanada
- but my understanding is they're putting equity into
this project, as well, and they want their vote to
count. And ... they have just as much right to that
as the state does, and so, that's the ... tug of war
that ... could go on in the future, if TransCanada
remains in the project. And one of the issues that
the administration is trying to fix by buying out
TransCanada is ... the governance issue.
9:16:28 AM
REPRESENTATIVE HAWKER stated that [slide 6] is about the
infrastructure project, which he said is very different from the
supply and management of the gas for the project. He asked who
the [signatories] are to the JVA.
9:16:56 AM
MR. DUBLER answered that they are the following five parent
companies, which he called, "co-venturers": ExxonMobil
Corporation, BP, ConocoPhillips Alaska, Inc., TransCanada, and
AGDC.
REPRESENTATIVE HAWKER asked Mr. Dubler to confirm that AGDC is
the only state agency representing Alaska on the project.
MR. DUBLER answered that is correct. He added that there is a
mechanism in place that allows AGDC to request access to data
for the state gas team. He said AGDC uses this data frequently
to ensure that the rest of the gas team is kept up to date on
the project.
REPRESENTATIVE HAWKER emphasized the importance of this
information as the crux of how the legislature established AGDC
and to what purpose. He said, "There's a reason why DNR is not
a [signatory] to building a pipeline project: they're a
regulator; ... they have the responsibility for maximizing the
value of Alaska's gas." He said AGDC is responsible for
"building a pipe project." He said the state has important
separate relationships, which he said he envisioned as a
contractor and client relationship; one agency would contract
with another and there would be mandated information sharing and
cooperation for maximum efficiency. He said while AGDC is
clearly the entity in charge, it seems like there is overreach
by other agencies. For example, he questioned why DNR, as a
regulator, has project engineers duplicating the work of AGDC.
MR. DUBLER said there is some necessary crossover between DNR
and AGDC. For instance, he explained, DNR will be the owner of
the gas if it elects to take royalty in kind instead of royalty
in value. Furthermore, DNR would also take DOR's tax gas, if
the producers elect to pay their taxes as gas instead of in
value. Mr. Dubler stated that as the owner of the gas, [DNR]
must participate in the gas balancing discussions, which bleed
into a lot of the commercial agreements. He emphasized that
because of DNR's distinct responsibilities, it is necessary to
"have them at the table."
REPRESENTATIVE HAWKER responded that that is DNR's lane, in
which it should be in control, while AGDC "should be staying off
there in yours." He said under statute, AGDC has full authority
to market, but in a client relationship with DNR - the entity
that has the gas. He encouraged the lane lines to be repainted.
9:22:11 AM
MR. DUBLER returned to the PowerPoint presentation, to slide 7:
"Alaska LNG Project Participation," which shows that the
resource owners are ConocoPhillips Alaska, Inc., BP, ExxonMobil
Corporation - the three producers - [and the State of Alaska].
The slide also shows that if the state elects to take royalty in
kind and the producers elect to pay their tax gas, the state
would own 25 percent of the resource that would be pledged to
the project. He said that resource ownership "moves over into
project interest," because they are aligned. He explained, "The
same resource that you own is the same percentage of the project
that you own and the same percentage of the equity that you put
into the project." He said the state's interest is currently
held by TC, in the gas treatment plant (GTP) and the pipeline,
and AGDC holds the state interest in the AK LNG facility.
MR DUBLER directed attention to slide 8: "Governance Related
Issues," which addresses equity alignment, an important concept
for the resolution of the TC issue, which Alaska's
administration is attempting to fix. He said, "In the future,
we'll assume that we've taken royalty in kind ... and that the
producers are paying their [tax] gas." He said the state would
own 25 percent of the gas going through the project. He stated
that with TC representing 25 percent in the midstream and AGDC
representing the downstream, the state's equity in the
integrative project would be left at approximately 12.5 percent,
which is a misalignment in the project between the gas that is
going through the line and the ownership that the state has in
that project. Regarding voting rights, Mr. Dubler said the
state does not have full voting participation in all project
decisions: the state, through AGDC, votes on downstream issues,
while TC votes on mid-stream issues. Regarding integrative
project decisions, Mr. Dubler said, "We still haven't resolved
how that vote's going to work."
9:24:37 AM
REPRESENTATIVE HERRON noted that yesterday a question regarding
the upcoming vote on the plan and budget, scheduled for 12/4/15,
had been asked, and Mr. Lee had said that until full payment is
made, it is probably not in [TC's] best interest to vote or [is
in TC's best interest] to vote "no." He ventured that would put
"a hiccup in the whole process." He asked if the state would
have a full vote if it pays off TC.
MR. DUBLER answered yes, but clarified that the state now has a
full vote, because it takes a unanimous vote to move forward on
a work program and budget. If the state, through AGDC, decided
to vote "no," then that would stop the plan.
REPRESENTATIVE HERRON said he is grateful for that
clarification. He offered his understanding that some
legislators had misunderstood Mr. Lee's response to mean that
unless [TC] gets full payment, "they're probably going to vote
no, unless they're forced to because of the default." He said
it is not in [TC's] interest to lose that money. He asked
whether Mr. Dubler thinks the state should pay off TC by
December 4.
MR. DUBLER answered that AGDC "has the exact same issue." He
said AGDC needs an additional appropriation in order to vote
yes. As to whether or not to pay off TC, he said [the state]
has a contract with TC, and that contract is subject to
appropriation, so that is a question to be answered by [the
lawmakers of the state]. He proffered that his professional
answer to the question is yes. He said it would send a bad
message to the credit world if the State of Alaska did not hold
up its contractual obligations.
REPRESENTATIVE HERRON ventured, then, that the clock is against
the state. He offered his understanding that TC would prepare
an invoice, the State of Alaska would review it, and then the
state would have to pay either by the seventieth or ninetieth
day. He reiterated that the clock is against the state, because
"everybody wants to do due diligence."
MR. DUBLER responded that although he has heard people talk
about 90 days, he cannot answer the question, because he is not
privy to the TC agreement with DNR.
REPRESENTATIVE HERRON commented that part of the issue he has
with the whole process is that there is an amended agreement to
the PA and "it was shelved by someone." He opined that the exit
strategy, which explained all this, should have been explained
to every Alaskan.
9:28:53 AM
REPRESENTATIVE HAWKER referred again to the governor's decision
to remove TC from the equation and reclaim that equity portion
of the project, and he asked if it is the administration's
intent to place that equity ownership in AGDC's possession.
MR. DUBLER answered that is his understanding.
REPRESENTATIVE HAWKER asked if, hypothetically, it could be
possible for the administration to assign that equity ownership
to another entity other than AGDC.
MR. DUBLER suggested that question may be better answered by the
Office of the Attorney General. He said he is not familiar with
the statutory authorizations any other entities have with the
state other than AGDC.
REPRESENTATIVE HAWKER said recently the redacted [participating
area] (PA) agreement was made available to the legislature. He
offered his understanding that that was the agreement that
really defined Alaska's initial role and relationship with TC,
pending further definition, if the state ever got around to
negotiating a firm transportation services agreement. He
offered his understanding that Mr. Dubler had nodded yes to
that.
[MR. DUBLER] said yes.
REPRESENTATIVE HAWKER said the PA had a provision such that if
the state took back ownership of TC, it would go back to DNR or
its designee. He asked Mr. Dubler if he was aware of that
provision and whether he had had any conversations with people
within DNR regarding their intent to designate AGDC as the
recipient of that equity.
MR. DUBLER answered he was neither aware of the provision nor
had held discussions with DNR specifically to it.
REPRESENTATIVE HAWKER said the other governing agreement is the
JVA. He related that he had never dealt with a PA, but has
dealt with a lot of JVAs, which are agreements between parties.
He said parties must always anticipate the inevitability of
someone wanting to leave an agreement. He said, "I would
imagine that this relationship would be better spelled out in
the joint venture agreement between folks." He asked if he was
correct in his understanding that "that still remains a
confidential agreement" to which [the legislature] does not have
access.
MR. DUBLER answered that is correct.
REPRESENTATIVE HAWKER asked if there was any assurance the
legislature could have that the equity will go to AGDC or does
the administration have plans to do "something else with this
equity."
MR. DUBLER answered he does not believe AGDC can give the
legislature that assurance, because it is DNR that has the
agreement with TC; however, he offered his understanding that
AGDC has not been told "anything to the contrary." He deferred
to Mr. Fauske.
9:33:22 AM
MR. FAUSKE said Mr. Dubler answered that question well.
REPRESENTATIVE HAWKER opined that this is a concern that the
legislature needs resolved. He said AGDC is supposed to hold
the primary responsibility for the State of Alaska in
negotiating the North Slope Gas Pipeline Project. He said
Governor Walker, in his opening of the special session, spoke of
the potential "de-bundling" of the integrated project - the
separation of ownership of the pieces and new cash partners, who
might "buy into this" and also be "LNG buyers." He asked if
AGDC had heard the governor's statements.
MR. DUBLER answered that he had not heard the opening ceremony
statements made by the governor; however, he said he is familiar
with the concept.
REPRESENTATIVE HAWKER asked, "So, do you have any knowledge of
the governor's intent to de-bundle the integrated project that
we think we're dealing with?"
MR. DUBLER answered, "I have not been involved in any ... of
those discussions personally, no."
REPRESENTATIVE HAWKER remarked that Mr. Dubler had offered "a
very careful answer." He then asked, "I heard that you are not
personally involved in any of those discussions. Are you aware
of any of those discussions going on with other folks?"
MR. DUBLER answered, "I am not."
9:35:03 AM
MR. DUBLER returned to the PowerPoint presentation, to slide 9:
"Project Governance." He said the left box on the slide shows
the sponsor group comprising [seven] entities, including AGDC,
DOR, and DNR. He said the sponsor group handles the big
decisions. He said DOR's presence in the group is helpful
during discussions of fiscal terms, while DNR has an important
role during discussion of gas balancing, for example. The next
group shown on the slide is ManCom, on which he sits for AGDC,
Mr. Lee sits for TC, and other representatives from BP,
ConocoPhillips Alaska, Inc., and ExxonMobil Corporation take
part, as well. He said ManCom is more technical in nature; it
delves into and votes on the work program and budget. He said
there are also more minor decisions made by ManCom.
9:36:51 AM
REPRESENTATIVE SEATON asked if there is already "a perceived
change in authority" in terms of [who would be given the
authority currently held by TC], within each of the groups
listed, when TC withdraws.
MR. DUBLER responded as follows:
This go back to ... the misalignment on votes that I
spoke to earlier. Technically the state has really
only one vote ... in these committees, and it's
currently being represented by both groups. So, to
the extent that TransCanada was no longer in the
project, AGDC would just carry that full 25 percent.
MR. DUBLER said the short answer to the question is that it
would be an easy transition.
REPRESENTATIVE SEATON asked if the assumption of what Mr. Dubler
said is that TC's 25 percent in the midstream would be
transferred to AGDC.
MR. DUBLER answered yes.
9:38:36 AM
REPRESENTATIVE HAWKER said everything the legislature is doing
during special session is predicated on that assumption - that
the equity would be transferred to AGDC. He said, "That is one
big assumption." He asked Co-Chair Nageak to request from DNR a
formal document stating that the equity in TC would be conveyed
to AGDC and not to any other entity. He said that is something
he would like to know before making a vote on the governor's
request.
CO-CHAIR NAGEAK said, "Yes, we will."
9:39:37 AM
REPRESENTATIVE HERRON requested of Co-Chair Nageak that he ask
the assistant attorney general to address that question during
the current hearing.
CO-CHAIR NAGEAK said, "We will."
9:40:11 AM
REPRESENTATIVE OLSON said he would like to hear the response
directly from the attorney general.
CO-CHAIR NAGEAK said he feels the same.
REPRESENTATIVE HERRON said that is fine, but suggested that the
assistant attorney general available via teleconference could
offer a preliminary response.
9:40:56 AM
REPRESENTATIVE SEATON recapped that several members would like a
document assuring that AGDC will be the entity that will hold
the state's 25 percent of the midstream of the project upon TC's
exit.
9:41:56 AM
JERRY JUDAY, Assistant Attorney General, Labor and State Affairs
Section, Civil Division (Anchorage), Department of Law, stated
that he is not aware of such a document currently in existence.
He offered his understanding that [SB 138] would appropriate the
funds for the buyout to AGDC. He added, "So, they're spending
the money; [therefore,] they would be acquiring the interest."
REPRESENTATIVE SEATON indicated that there was a need for
assurance that the midstream 25 percent would be transferred to
AGDC, instead of, for example, DNR, in order to "align all the
voting interests in the project."
9:43:25 AM
REPRESENTATIVE OLSON stated, "On that point, I think I'd like to
still see one from the attorney general just for purposes of
clarity and so there's no misunderstandings."
9:43:41 AM
REPRESENTATIVE TARR referred back to the sponsor group and
[ManCom], as shown on slide 9, and said that the legal
relationship is created through the JVA. She asked:
As far as having any equity in the project, ... it
seems to me, then, it has to be AGDC, because the
others are not signatories to that JVA, and that
creates the legal relationship that would allow for
equity in the project, while the physical resource
would still clearly be the property of the state,
right?
REPRESENTATIVE TARR, in response to Mr. Dubler, confirmed that
by "physical resource," she means the gas.
9:44:31 AM
MR. DUBLER confirmed that [the physical resource and the equity]
are different.
9:44:52 AM
MR. DUBLER returned to the PowerPoint presentation, to the third
box on slide 9, which shows the PSC, which is the technical
committee that oversees the Project Management Team PMT). He
noted that Mr. Krusen of AGDC sits on that committee and
provides guidance to Mr. Dubler, himself, regarding technical
issues that come to a vote, attends all the ManCom meetings with
Mr. Dubler, briefs Mr. Dubler on every meeting of the PSC, and
produces a report for everyone updating them on the technical
side of the project. Mr. Dubler related that the PMT, as shown
on the far right of the slide, is composed of four parties: BP,
ExxonMobil Corporation, ConocoPhillips Alaska, Inc., and
TransCanada. He said they provide the oversight of the day-to-
day work by contractors that are designing the project and doing
most of the work. He said, "And that's the 128 bodies that I
think Representative Tarr referred to earlier."
9:46:13 AM
MR. RICHARDS introduced slides 10-12 of the PowerPoint,
regarding: "Project Management Team (PMT)." He said the
organizational chart on slide 10 shows that the senior project
manager for AK LNG is Steve Butt; his direct reports represent
the leadership team within the project management. One of those
[positions], he said, is currently held by a TC employee. The
next group down on the chart shows "discipline leads" for each
of the major sub-projects. Mr. Richards said under the box
labeled "Pipeline" is another TC employee, who is leading the
Facilities Engineering Team. He indicated that the chart shows
where TC fits within the PMT structure; it is in leadership
roles related to the technical aspects of the project. He said
the chain is made up of co-venture owner representatives that
have the overall responsibility of managing the workflow - the
technical aspects primarily being done by contractors.
9:47:42 AM
REPRESENTATIVE HAWKER pointed out that slide 10 is a good
example of what the legislature wants: the name of the person
in charge is provided in the top box on the chart.
9:48:14 AM
MR. RICHARDS, regarding slide 11, said the PMT is made up of co-
venture employees that are seconded or placed into the position
by their owner companies, but paid for by the project. They
work for the project to manage the skill sets for which they are
responsible. Through the JVA, there is a nomination process
followed to fill those roles, with the major driving force being
to find the most qualified individual to fill each role. As
vacancies are identified, all the players are requested to
submit nominations. Then the PMT makes the selection. He
indicated there is a management committee that makes final
decisions about the management team.
MR. RICHARDS stated that "when SB 138 came about," AGDC did not
have the responsibility for the AK LNG Project. So, at that
time, when AGDC's role was primarily the LNG portion of the
project, AGDC hired Mr. Krusen "to fill that role for us." He
said AGDC did not have the opportunity to second employees into
the project management team (PMT), because it was completing its
FEED effort for the ASAP Project. He stated that with the
completion of that major project, AGDC now has key senior
credentialed employees - individuals that could meet the roles
as they are vacated on the PMT.
MR. RICHARDS noted that slide 12 represents the assignment by
the parent company into the PMT. He explained the initials
found on the slide as follows: EM is ExxonMobil Corporation; CP
is ConocoPhillips Alaska, Inc.; TC is TransCanada; and BP [was
formerly referred to as] British Petroleum. He said the PMT was
"stood up after concept selection," the JVA was signed, and the
roles were filled by co-venture organizations. Mr. French
pointed out that the chart on slide 12 shows there are a total
of 12 positions from TC, but noted that Mr. Lee yesterday
identified that there are actually 15. He explained that [the
three other] positions are administrative, and the positions
shown on the chart are more technical in nature. Mr. French
said that if the decision is made to buy out TC, an offer has
been made for those TC employees on the PMT to remain in place
through a transition time, which would be to the end of May
2016. This would provide continuity and consistency in
finishing the pre-FEED effort for the project.
9:51:29 AM
REPRESENTATIVE JOSEPHSON asked why ExxonMobil Corporation's
human representation is so disproportionate. He observed that
the ExxonMobil Corporation's number is 400 percent larger than
that of ConocoPhillips Alaska, Inc.
9:52:01 AM
MR. DUBLER explained the intention was for the number of staff
each entity has on the project to be approximately the same as
the entity's equity ownership. He said the hiring process is
like that of any other: a position opens and the [companies]
submit candidates if they wish to do so. He said the companies
have the ability to "put employees in there up to approximately
their ownership percentage." He said some entities did not put
forth as many names as others; ExxonMobil Corporation was
aggressive with its submissions and a lot of its employees were
selected. He reemphasized that the goal is to find the best
people available. He indicated that an employee that is under
par would not be selected just because there may be no other
employees available at the time for a position. He concluded,
"So, we picked the best that we could get for every job that
came open."
REPRESENTATIVE JOSEPHSON said he understands that it is a joint
venture, [where] everyone will be vigilant about being fair and
finding balance, so that everyone will make money.
Nevertheless, even though these are not voting interests, he
said if he was ConocoPhillips Alaska, Inc. or BP, for example,
he would be "a little nervous to see my crew outnumbered in that
way."
9:54:20 AM
REPRESENTATIVE HAWKER, regarding the offer to keep on employees
from TC during the transition, asked for confirmation that Mr.
Dubler had said those employees would stick around through the
Pre-FEED phase until AGDC would "find something else to do with
it" or another way to replace them.
MR. DUBLER offered his understanding that that was the original
intent; however, since the pre-FEED end date has been pushed
out, the time has been extended until the end of May [2016].
REPRESENTATIVE HAWKER asked if the committee could presume that
there is a scheduled end to the Pre-FEED and beginning of FEED
at the end of May 2016.
MR. DUBLER answered no. He explained, "That was the earlier
date; that was ... what I like to call ... the hopeful date that
we had over the last year." The current proposal, which has not
been approved yet, is to push the FEED decision to approximately
June 2017, which is "the original date in the documents."
REPRESENTATIVE HAWKER asked which documents?
MR. DUBLER answered the JVA. He added that to the extent that
[TC] employees are retained by the project and then leave, they
would be replaced in the same manner as any other attrition of
employees.
REPRESENTATIVE HAWKER said he appreciated hearing that the Pre-
FEED is in accordance to the JVA, which he reiterated the
legislature cannot access. He repeated the mid-year 2017 date.
MR. DUBLER confirmed that is correct.
9:56:57 AM
The committee took an at-ease from 9:57 a.m. to 10:14 a.m.
10:14:41 AM
MR. RICHARDS continued with slide 12 of the PowerPoint
presentation. He said the slide shows that there are a total of
135 people currently within the PMT, and as work efforts are
concluded for the Pre-FEED phase, the number would likely
decrease.
10:15:17 AM
REPRESENTATIVE SEATON offered his understanding that Mr.
Richards had said the 135 number would decrease under Pre-FEED.
He asked, "Under FEED, would the project expect to have more or
would those all be contracted?"
MR. RICHARDS answered that the development of the FEED
organization and its representation is currently under
consideration by the PMT. He indicated that considerations
include areas of expertise, functions, roles, and the number of
people needed. He deferred to Mr. Krusen to provide further
clarity to the response.
10:16:28 AM
FRITZ KRUSEN, Vice President, Alaska LNG, Alaska Gasline
Development Corporation (AGDC), Department of Commerce,
Community & Economic Development (DCCED), estimated that the
numbers would probably increase "by a factor of" 3-5 for the
FEED effort. He said just as the 135 positions represent the
"key influencing spots that the project management team would
like to have, that trend would continue once we're in FEED." He
said expenditures would increase 3-5 times. The staffing levels
would increase by at least that much, maybe a little bit more,
because there likely would be more geographical diversity during
FEED. He explained that during Pre-FEED, all the engineering
was done within the U.S., but there is a pretty good chance that
in FEED, some of the engineering would be done internationally.
REPRESENTATIVE SEATON concluded that the PMT would get larger;
it is not just that the numbers of hired contractors would get
more money.
MR. RICHARDS answered that is correct. He said currently the
major subcontracting groups - whether the pipeline, gas
treatment plant, or LNG plant - are co-located in the cities
where the contractors perform many of the Pre-FEED work
activities. He continued:
So, for instance, pipeline is being taken in Calgary,
by Willy Parsons; and then for the gas treatment
plant, it's being undertaken in Denver, with the
company called, AECOM (ph); and then, lastly, the
liquefied natural gas plant is being designed in
Houston, with Chiota (ph) and CPNI (ph).
MR. RICHARDS said that as Mr. Krusen indicated regarding FEED
organizations, depending on where contractors are, there would
be a need for organizations to manage those contractors in those
locations.
10:19:10 AM
MR. RICHARDS directed attention to slides 13 and 14:
"TransCanada's Role Alaska LNG." He said the committee had
heard about [TC] holding the state's [25 percent] interest in
the mid-stream and covering the cash calls associated with the
state's mid-stream interest. He listed other positions within
the PMT: one within Environmental, Regulatory, & Land (ERL);
one person within the Gas Treatment Plant sub-project; a
majority within the project's pipeline sub-project group; and
three additional holding administrative functions within the
PMT. He said that totals 15 within AK LNG.
MR. RICHARDS, as shown on slide 14, said TC is not expected to
build the pipeline; that will be led by ExxonMobil Corporation
and other co-venture owners. He said the project will seek
contractors who will actually do the construction of the three
main subprojects: the gas treatment facility, the pipeline, and
the LNG plant. He said TC held that role, "as an owner and on
the project management team," making sure both their interest
and that of the state was being overseen correctly. He
reiterated that TC has offered for its seconded employees to
remain during the transition period through May 2016, and when
vacancies become available, AGDC would have the right - as a co-
venture partner - to nominate employees to fill the vacated
positions - not only those currently held by TC, but also those
vacancies that become available by other co-venture employees.
He reemphasized the level of expertise that have "just come off
the ... front-end engineering design effort for the Alaska
standalone pipeline project." He added, "So we have Alaskan-
based knowledge that has just conducted a major engineering
effort and cost ... estimate for pipeline and gas treatment
facilities."
10:21:51 AM
MR. RICHARDS showed slide 15: "AGDC Technical Team - Skills."
He talked about AGDC's staff of senior credentialed
professionals. He continued, as follows:
We had a project management team very similar, in
terms of scope to what you've seen by the AK LNG
Project, for the completion of the Alaska Stand Alone
Pipeline Project. We were extremely lucky to be able
to attract folks to come and work on that ... project
who had, as Dan indicated, 30- to 35-plus years of not
only Arctic, but major project experience, in terms of
development, construction, and project management of
... major facilities, not only in Alaska, but around
the world.
MR. RICHARDS emphasized that there have been so many different
innovations, and many of the individuals that have come to work
on the project worked on those previous iterations and want the
opportunity to be able to complete a project. He said AGDC's
staff includes individuals with knowledge in the technical
realm, as well as a group of people with knowledge of regulatory
issues. The latter group is advancing AGDC's environmental and
supplemental impact statement. He said AGDC feels it has
tremendous resources upon which to draw.
10:23:16 AM
MR. RICHARDS directed attention to slide 16: "AGDC Technical
Team - Results." He said AGDC completed development of the
ASAP, including completion of the Pre-FEED and FEED for the
[North Slope] gas treatment facility, a 733-mile mainline, and
[a 30-mile Fairbanks lateral pipeline]. He said the culmination
of that work, which began in 2013 and ended at the finish of
2014, was a Class 3 cost estimate and project execution plan.
He said AGDC followed industry standards and delivered on time
and under budget. He said the core technical team is still
available to assist AGDC.
10:24:28 AM
CO-CHAIR TALERICO asked for an explanation of a Class 3 cost
estimate.
MR. RICHARDS answered that it is an industry standard that
follows the American Association of Cost Estimators to define
the level of "assurity" on a cost estimate. He explained that
when a project begins, there may be a "back-of-the-napkin,
simplified estimate." As the work is defined through
engineering and "regulatory," risks are considered and the
uncertainties are removed. For the FEED effort, AGDC hired
civil contractors and pipeline contactors, "went to modular
fabrication yards in Asia," and were able to get bid-level
estimates. He said the contingency was at an appropriate level,
based on the engineering. He stated, "At the stage-gate process
that we'd been following, a Class 3 estimate is a well-defined
estimate, and ... our original goal was to take that estimate
into an open season where the shippers would see that they had
confidence in the work product that we had done to that ...
state."
10:25:59 AM
REPRESENTATIVE HAWKER thanked AGDC for the work it accomplished
on the ASAP Project, which he said AGDC carried out exactly as
directed by legislature. He said the corporation completed the
project on time and under budget, while always being available
to answer the legislature's questions.
MR. RICHARDS responded that AGDC is proud of that effort. He
said that with the scrutiny that would be placed on the
corporation, AGDC wanted to adhere to industry practice, which
is why the Class 3 estimate exists and there is now a project
execution plan that clearly defines how, if charged to do so,
AGDC would execute a project from this point forward.
10:27:10 AM
REPRESENTATIVE SEATON asked if AGDC would be the designated
holder of the state's equity in that project.
MR. RICHARDS answered that the concept of overall ownership of
the project had not yet been decided. He said AGDC was
considering the concept of bringing on an owner/builder/operator
(OBO) and was charged by the legislature to advance the project
at the least possible cost.
REPRESENTATIVE SEATON said he is trying to figure out whether
AGDC has the authority to hold the equity and who would be
"owning the project."
MR. RICHARDS responded that the authorities granted to AGDC by
the legislature to plan, own, finance, construct, and operate a
pipeline were clear.
10:28:37 AM
MR. FAUSKE added that "ASAP and the project is 100 percent owned
by the State of Alaska." He said that has proven to be a
valuable asset "in reference to materials and/or information
that we are selling and ... working with AK LNG project." He
said AGDC had gone through the OBO scenario and had negotiated a
relationship with "Enbridge." Mr. Fauske noted that "this
project" had been "slowed to some degree" because of
advancements related to the AK LNG Project, but stated that AGDC
had begun negotiations with [Enbridge] as to how it would come
in to the corporation with its people, seconding some of AGDC's
people possibly, and take over management as an OBO of that
project. He stated, "We had not determined at what level, but
we did have an absolute interest by them to function in that
capacity." He said he thinks that is significant information
for the legislature. He said Enbridge is a fine firm.
MR. RICHARDS continued to slide 17: "AGDC Ability to Assume
TC's Role." He said AGDC currently holds the state's interest
in the LNG facility - a complex and expensive component in the
integrated project that represents nearly 50 percent of the
cost. He said AGDC was able to secure the expertise of Mr.
Krusen, from ConocoPhillips Alaska, Inc. Going forward, if
provided the charge to take on the mid-stream gas treatment
plant and pipeline portion of the project, AGDC would utilize
the resources available, both in-house and through contract, to
take on the role to represent the state's interest in that
effort. He said AGDC assumed TC's role in coordinating the
Federal [Energy] Regulatory Commission's (FERC's) National
Environmental Policy Act of 1969 (NEPA), known as the
Environmental Impact Statement. He said AGDC has a person
coordinating the effort of the co-venture partners; it is a role
that it took over from TC. He said AGDC has been asked to
engage in the midstream effort, because it had just concluded
the ASAP Project and had the expertise and technical information
valuable in helping to advance AK LNG. He related that AGDC was
asked to come in as co-venture representatives, to oversee the
work of the PMT and contractors and ask questions to ensure the
efficiency and economy of the project. He emphasized AGDC's
commitment to continue in this manner.
10:32:28 AM
REPRESENTATIVE JOHNSON asked if TC is involved with anything
else regarding FERC that Alaska would need to assume, and
whether that would slow down the process.
10:32:57 AM
MR. DUBLER offered his understanding that most of the permits
are in the name of the project and not in the name of the
individual participants. One export license acquired by the
project was in name of the three producer parties only - not TC
or the State of Alaska. He added, "And that's one of the things
that we're ... working on to get into that, but I don't believe
that would cause any delay at all in ... the project."
10:33:31 AM
MR. KRUSEN stated that the pipeline project team has a FERC
contact - a person from ExxonMobil Corporation. He said AGDC
also has a relationship with that person on pipeline matters.
REPRESENTATIVE JOHNSON said he wants to ensure that if Alaska
takes over the role of TC, the project would not be slowed down
through FERC.
10:34:34 AM
MR. RICHARDS stated his belief that AGDC is keenly aware of all
the transactions being taken with TC. He mentioned technical
work being done and interaction with the Pipeline Hazzard
Materials Safety Administration for stream-based design. He
said, "We are working ... diligently and cooperatively between
the two projects."
10:35:05 AM
MR. RICHARDS mentioned the [House] Finance [Standing] Committee
and the purpose of the slide presentation as a status update on
the individual funds that have been granted to AGDC to manage -
in this particular case, the AK LNG fund. He said, "So, we
wanted to give representation of the status of the fund and the
expenditures out of that fund." He asked that Mr. Tangeman or
Mr. Baker be invited to "give this update."
10:35:33 AM
BRUCE TANGEMAN, Vice President, Administration & Finance, Alaska
Gasline Development Corporation (AGDC), Department of Commerce,
Community & Economic Development (DCCED), directed attention to
slide 18: "Alaska LNG Fund Status." He said the slide outlines
the AK LNG fund when it was capitalized under SB 138, and it
shows the expenditures to date. He said the original fiscal
note included $67.265 million, as well as $2.5 million to DOR
for the [project financing options] report and $70,000 to
Department of Transportation & Public Facilities (DOT&PF) for
infrastructure studies, for a total of $69.835 million. He said
the bottom portion of the slide shows spending through fiscal
year 2016 (FY 16). He said reimbursable services agreements
(RSAs) were executed with DOR and DOT&PF; the AK LNG Project
cash calls under the original work plan and budget were
estimated to be $51.392 million. He said the RSA originally had
approximately $57 million as the placeholder estimate. He said
the AGDC corporate operating component spent approximately $4.5
million to date; external contractual support paid to SME is
approximately $5.2 million, of which he said Mr. Richards could
speak to how some of that work is reimbursable, which he
explained is why there are statutorily designated program
receipts in the current appropriation bill. He said the $5.9
million shown for additional contractual work for TC pickup is
to cover work that AGDC will be inheriting if the buyout takes
place. It would be for continued work from the corporate
perspective to get through Pre-FEED. He stated that the total
estimated outflow of $66.7 million leaves a balance in the fund
of approximately $3.1 million, and AGDC is showing that amount
as "a placeholder" with which to enter FY 17. He said AGDC is
currently going through the budget process; it did not think it
appropriate to show a FEED budget for the legislature; that will
be addressed later. Mr. Tangeman explained that the information
[on slide 18] shows that it is possible to enter FY 17 with the
current fund balance; however, he said everyone should
understand that AGDC would be back before the legislature
requesting a larger appropriation to "pick up the speed" and
"bring FEED to conclusion."
10:38:37 AM
SENATOR OLSON asked where he could find information related to
the expenditure on the 42- to 48-inch pipeline study.
MR. TANGEMAN deferred to Mr. Richards and Mr. Dubler.
MR. RICHARDS indicated that that information is included on
[slide 22]. In response to a follow-up question from
Representative Olson, he said the work effort for the 48-inch
pipeline review had just been undertaken the beginning of the
current month.
REPRESENTATIVE OLSON said he had been under the impression that
it had been going on for four or five months.
10:39:41 AM
MR. KRUSEN explained that the studies for the 42-inch pipeline
are the whole basis for the project and have been going on
throughout Pre-FEED, whereas the actual expenditures for "48-
inch up to the same level" just began. He proffered, "I'll just
throw out a rough number of about $2 million thus far, and then
... maybe that will become $3 million by the end of 2015."
REPRESENTATIVE OLSON asked when the study would completed.
MR. KRUSEN offered his understanding that the result related to
the 48-inch pipe would be presented "a bit before April 1," and
then "the decision point is expected to be April 1."
REPRESENTATIVE OLSON said he had heard that the approximate
difference in volume between the two is about 1.1 "b." He asked
if that is accurate.
MR. KRUSEN answered that it depends on the comparison: the 42-
inch pipe with 8 compressors and the 48-inch pipe with 4
compressors are able to feed 3 LNG plants, plus the instate
demand. He said if more compressors are added to the 42-inch,
it would be possible to feed another LNG plant. He indicated
the same would be true regarding the 48-inch pipe. He said in
round numbers the amount would be 1 "billion standard cubic
foot." He said that is where the 42-inch pipe capability ends,
whereas the 48-inch pipe has another step above that "of round
numbers - another billion."
REPRESENTATIVE OLSON noted that 1.1 "b" is approximately the
offtake at Pt. Thompson that was approved by the Alaska Oil and
Gas Conservation Commission (AOGCC) a couple days ago;
therefore, he ventured "we have to find another Point Thompson
to fill it."
[AN UNIDENTIFIED SPEAKER] answered that is correct.
10:42:42 AM
REPRESENTATIVE HERRON asked where the jobs are located for those
who build 42-inch pipe.
MR. RICHARDS answered that the 42-inch mainline pipe can be made
in Florida. He offered his understanding that there are plans
for another facility to be built in the Southeast part of the
U.S. He said the capability for the stream-based design portion
is either in Europe or Asia.
REPRESENTATIVE HERRON asked where the jobs to [manufacture] 48-
inch pipe would be.
MR. RICHARDS said he does not know of any place in U.S. where
48-inch longitudinal weld pipe is manufactured.
REPRESENTATIVE HERRON concluded that if Alaska chose the 48-inch
pipe, it would be driving potential jobs overseas.
10:44:11 AM
REPRESENTATIVE HAWKER asked if it is fair to say that the
purpose of the 42-inch to 48-inch pipe study is to look at costs
and alternatives from a project engineering standpoint.
10:44:42 AM
MR. RICHARDS responded that the work that has just commenced
regarding the 48-inch pipe is "to essentially do the Pre-FEED
level effort commensurate to what has previously been done for
the 42." He explained that this is necessary in order to have
the best understanding when making the platform decision.
REPRESENTATIVE HAWKER asked for confirmation that the work that
is being done is engineering.
MR. RICHARDS answered that is correct.
REPRESENTATIVE HAWKER said the committee had just heard that in
order to utilize a 48-inch pipe to its capacity, it is necessary
to identify another source of gas the equivalent of Point
Thompson, along with bringing up the level of engineering to
"the same place you got the 42-inch project." He asked if AGDC
is conducting a probability study or any other way of
determining that there actually exists gas that could be brought
to this project in the necessary timeframe, from locations that
could be economic, by competent producers, and with the
necessary funds to make it happen. He clarified that he wants
to know if economic feasibility is being considered in addition
to physical properties.
10:46:23 AM
MR. DUBLER responded, "None of those studies are being done at
AGDC."
REPRESENTATIVE HAWKER asked Mr. Dubler if he is aware of any
such consideration being done anywhere else within the project
structure. He recollected previous testimony indicating that
even though AGDC has been given primary responsibility,
apparently it does not have it.
MR. DUBLER offered his understanding that DNR has done those
studies, but he said he has not seen them.
REPRESENTATIVE HAWKER said he hopes the committee has the
opportunity to question DOR.
10:47:02 AM
REPRESENTATIVE JOHNSON indicated a desire to return to
discussion of [slide 18].
10:47:17 AM
REPRESENTATIVE TARR directed attention to the positive balance
shown on slide 18 for FY 17. She indicated that [SB 138] would
give [AGDC] $5 million in receipts, and she said she is trying
to figure out why that is not reflected on slide 18. She asked,
"Should that be on the reimbursement line ... that's at $2,750
[million]?"
10:47:54 AM
MR. RICHARDS answered that the line titled, "Reimbursement Due
AGDC for AK LNG Project Work" shows an estimate of $2,750
million. The next slide addresses the need for $5 million of
receipt authority. He explained the difference is AGDC has two
fund sources: the in-state natural gas pipeline fund and the AK
LNG fund. The corporation performed work for the AK LNG
project, essentially acting as contractor, and that work is
nearly $3 million. So, AGDC will need to have that receipt
authority in order for the money to flow back to AGDC and, in
this case, into the AK LNG fund. He said AGDC also had work
that the AK LNG project wanted that was work effort that had
been funded by the in-state natural gas pipeline; therefore,
AGDC will be using that receipt authority to reimburse the in-
state natural gas pipeline fund as well. He concluded, "So,
that's why it's not represented on this particular slide."
10:49:21 AM
REPRESENTATIVE JOHNSON, regarding slide 18, noted that he saw
RSAs to DOR and DOT&PF, but nothing to DOL. He offered his
understanding that there were 11 people from DOL listed on the
aforementioned Integrated State Gas Team chart, and he asked Mr.
Tangeman why DOL was not listed [as an expense category] on
slide 18.
10:49:44 AM
MR. TANGEMAN answered that the original fiscal note did not
include any RSA work with DOL. He said, "We do have an
unbudgeted RSA for approximately $1 million that is coming to
conclusion for that amount that we have used over the last
fiscal year." He said the current funding under SB 138 does not
address the needs that are being requested at this time by DOL.
REPRESENTATIVE JOHNSON asked if the RSAs are billed in actual
time or are "marked up." He said, "I've heard some departments
that have gotten some RSAs that are being charged more than the
actual cost. Are we watching that closely? And ... the
Department of Law is the one that ... I've heard has been doing
that. That's the reason I asked the question about the RSA."
He asked for clarification regarding billing and the work done
by DOL.
10:51:10 AM
MR. TANGEMAN answered that the $1 million unbudgeted RSA is a
monthly bill that would be received and reviewed by DOL, sent
back for AGDC's review, then resent to DOL. He said AGDC kept
tight control of the fund source. He said the RSA process with
DOR involved two bills: an invoice to kick off the study and a
second one when it came to conclusion. He offered his
understanding that a one-bill RSA was used for DOT&PF.
10:52:08 AM
MR. DUBLER added that the majority of the bills received from
DOL are third-party billings from outside counsel. He said
outside counsel is assigned to AGDC for commercial negotiations.
He continued as follows:
They submit a bill every month; send it to us to
review for the hours; it goes to law to review for
contractual compliance, because the contract is
actually with the Department of Law; and then they ...
pay that bill and ... we reimburse them through the
RSA.
10:52:55 AM
REPRESENTATIVE JOHNSON asked if, of the 11 DOL people listed on
the aforementioned chart, some are "contract people."
MR. DUBLER confirmed he has seen the chart, and he said both DOL
lawyers and outside counsel are represented on it. He listed
some firms named on the chart.
REPRESENTATIVE JOHNSON suggested he had further questions, but
not for the representatives from AGDC.
10:54:10 AM
REPRESENTATIVE TARR noted that a Section 5 was added to SB 138,
which states that the corporation may not charge a fee for the
service in an amount greater than the amount necessary to
reimburse the corporation for the cost of the service. She said
at least that serves as a protection when AGDC "is providing a
service and charging." She asked if the expectation is that
that is a reciprocated relationship so that the situation
described by Representative Johnson wouldn't happen. She asked,
"How does that relationship work?"
MR. DUBLER said Section 5 does relate to services for both
transporting and liquefying the state's natural gas. He said in
other words, AGDC would charge DNR for those services. He said
he is not aware of any overhead or any allocation charge that
DOL has to AGDC's external counsel bills. He deferred to Mr.
Tangeman.
10:55:34 AM
MR. TANGEMAN responded that he is not aware of any overhead
charges for the unbudgeted RSA activity.
REPRESENTATIVE TARR pointed out that statute specifies it would
apply and asked whether the expectation is then that that would
not happen.
MR. TANGEMAN answered yes.
10:56:16 AM
CO-CHAIR NAGEAK acknowledged there was further discussion to be
had at a future meeting. He reissued the invitation for the
attorney general to come speak to the committee.
10:56:57 AM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 10:57 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 10.29.15 HSE RES AGDC Presentation.pdf |
HRES 10/29/2015 8:00:00 AM |