Legislature(2023 - 2024)ANCH LIO DENALI Rm
12/09/2024 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Southcentral Lng Imports Update | |
| Presentation(s): Qilak Lng Project | |
| Presentation(s): Susitna River Valley "clean Coal" Plant | |
| 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
Anchorage, Alaska
December 9, 2024
1:00 p.m.
MEMBERS PRESENT
Representative Tom McKay, Chair
Representative George Rauscher, Vice Chair (via teleconference)
Representative Thomas Baker
Representative Kevin McCabe
Representative Stanley Wright (via teleconference)
Representative Jennie Armstrong
Representative Donna Mears
Representative Maxine Dibert (via teleconference)
MEMBERS ABSENT
Representative Dan Saddler
OTHER LEGISLATORS PRESENT
Representative Cathy Tilton
COMMITTEE CALENDAR
PRESENTATION(S): SOUTHCENTRAL LNG IMPORTS UPDATE
- HEARD
PRESENTATION(S): QILAK LNG PROJECT
- HEARD
PRESENTATION(S): SUSITNA RIVER VALLEY "CLEAN COAL" PLANT
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
JOHN SIMMS, President
ENSTAR Natural Gas
Anchorage, Alaska
POSITION STATEMENT: Presented a PowerPoint, entitled "ENSTAR
Cook Inlet Update," during the Southcentral LNG Imports Update.
MEAD TREADWILL, CEO
Qilak LNG
Anchorage, Alaska
POSITION STATEMENT: Co-presented a PowerPoint, entitled
"Alaska's Arctic LNG Opportunity," during the Qilak LNG Project
presentation.
DAVID CLARK, COO
Qilak LNG
Anchorage, Alaska
POSITION STATEMENT: Co-presented a PowerPoint, entitled
"Alaska's Arctic LNG Opportunity," during the Qilak LNG Project
presentation.
FRANK PASKVAN, Affiliate Professor
Institute of Northern Engineering
University of Alaska Fairbanks
Anchorage, Alaska
POSITION STATEMENT: Presented a PowerPoint, entitled "Alaska
CCUS Activities and Opportunities Roadmap; Biomass-Coal Fired
Power Plant Feasibility Study; ARCCS Project Status," during the
Susitna River Valley "Clean Coal" Plant presentation.
ACTION NARRATIVE
1:00:29 PM
CHAIR TOM MCKAY called the House Resources Standing Committee
meeting to order at 1:00 p.m. Representatives McCabe, Mears,
Baker, Armstrong, Wright (via teleconference)), and McKay were
present at the call to order. Representatives Rauscher (via
teleconference) and Dibert (via teleconference) arrived as the
meeting was in progress. Also presented was Representative
Cathy Tilton.
^PRESENTATION(S): Southcentral LNG Imports Update
PRESENTATION(S): Southcentral LNG Imports Update
1:03:36 PM
CHAIR MCKAY announced that the first order of business would be
the Southcentral LNG Imports Update presentation.
1:04:56 PM
JOHN SIMMS, President, ENSTAR Natural Gas, presented a
PowerPoint [hard copy included in the committee packet],
entitled "ENSTAR Cook Inlet Update," during the Southcentral LNG
Imports Update. He gave an overview of ENSTAR Natural Gas
Company (ENSTAR) and its systems, including 3,249 miles of
distribution pipeline and 442 miles of transmission pipeline.
ENSTAR's standard of service is outlined in AS 42.05.291. In
response to a question from Representative McCabe, he confirmed
that gas is declining in the Cook Inlet and that a solution is
needed. The region faces significant challenges that will
require long-term planning and development.
1:11:11 PM
MR SIMMS resumed the presentation and acknowledged that the cost
of supply is increasing. Gas from the Cook Inlet, the Trans-
Alaska Pipeline System, and imported liquefied natural gas (LNG)
are anticipated to be in the $12-$15 range. Wood Mackenzie
found that Cook Inlet production is expected to be depleted by
the mid-2030s. Exploration success in the region has been
limited to a 9 percent success rate with only three commercial
discoveries. He anticipated that of all the supply and market
risks to the Cook Inlet, the legislature could address cost
pressures as a temporary measure. He outlined the combined
utilities' annual demand on the region, indicating that by 2026,
there won't be enough gas to meet a "normal" scenario and by
2029, utilities will face significant challenges meeting their
customers' needs. He announced that ENSTAR executed a contract
with Furie Operations Alaska, LLC ("Furie") beginning in 2026 to
meet that demand despite a massive development and execution
risk. Top options to diversify the future gas supply include
the Cook Inlet gas supply, floating storage and regasification
units (FSRU), a land-based regasification terminal, and the
North Slope pipeline.
1:22:38 PM
MR. SIMMS, in response to a series of questions, said
deliverability is part of the gas supply challenge and storage
will be a critical component for both the electric utilities and
ENSTAR. He talked about the potential benefits to the Cook
Inlet production if the North Slope Pipeline were to come online
and the history of gas supply contracts. He summarized the
Jones Act and acknowledged that acquiring a waiver to allow the
use of a foreign tanker would reduce cost and provide
optionality to the utilities.
1:32:02 PM
MR. SIMMS gave his final thoughts on slide 11, emphasizing that
storage is a key component of any project. He questioned both
the legislature's and the utilities' role in the energy future
of Alaska. In response to a series of follow-up questions, he
said challenges surrounding permitting and deciphering who is
liable for cost overruns are risks that need to be mitigated.
He detailed the status of the wells at the Cook Inlet Natural
Gas Storage Alaska (CINGSA); Furie's efforts to deter LNG
importation; and the challenges of reaching out to an LNG Canada
project.
^PRESENTATION(S): Qilak LNG Project
PRESENTATION(S): Qilak LNG Project
1:48:15 PM
CHAIR MCKAY announced that the next order of business would be
the Qilak LNG Project presentation.
1:48:48 PM
MEAD TREADWILL, CEO, Qilak LNG, presented a PowerPoint, entitled
"Alaska's Arctic LNG Opportunity," dated 12/9/24, which gave a
project description, an update on Qilak LNG, and suggestions on
how the State of Alaska can help. The North Slope is home to
significant trapped natural gas resources. Based on Russia's
Arctic success, Qilak LNG signed a heads of agreement (HoA) with
ExxonMobil Corporation in 2019 to produce a feasibility study
for the supply of gas for 20 years at Point Thompson, which has
proven gas reserves of at least 6 trillion cubic feet (Tcf).
Qilak LNG has also begun discussions with the Northwest
Territories (NWT) government and producers on the Mackenzie
River Delta who completed a PFS for a similar concept. By
taking the pipeline out of the equation, the capital expenditure
("CapEx") would be reduced to increase competitiveness in the
marketplace. Russia began reliably shipping LNG through the
Arctic in 2017. He detailed the Yamal Project, which was
completed using modules delivered from Asia via the Bering
Strait and plans to expand using the same near-shore concept as
Qilak LNG. He discussed the next generation icebreaking tankers
that would be used and plans to export LNG from Alaska's North
Slope to Asia; the cost advantage of Qilak's geographic
position; and its favorable cost structure with unique
commercial constructs.
2:04:12 PM
DAVID CLARK, COO, Qilak LNG, continued the presentation on slide
20 to discuss environmental, social, and corporate governance
and emphasized that Qilak is committed to reducing greenhouse
gas emissions by using gas a bridge fuel. In addition, all CO2
removed from feed gas will be sequestered using the latest in
technology and carbon accounting.
MR. TREADWILL continued the presentation by outlining Qilak's
projected timeline with a target completion date of 2031 and
reviewing the market strategy. He discussed Qilak's position in
the market, emphasizing that strategic and financial partners
are ready to join, but the risk of feasibility and permits is an
issue. He estimated the cost of finishing feasibility at $12
million and expressed confidence in the project considering the
solid commercial negotiations with the North Slope producers and
the state as a royalty owner, as well as the buyers with regard
to front-end engineering design (FEED). He said the big
difference between converting a shipyard versus building a
pipeline is the lower risk. Qilak is interested in working with
the North Slope Borough on a number of issues and ensuring that
the project is not in conflict with subsistence whaling. He
concluded the presentation by outlining the following ways the
State of Alaska could help:
Support Federal Reforms:
• Offshore permitting path with MARAD
• Eliminate repetitive DOE export licenses;
license already granted for Pt Thomson
Clarify State Support in the Marketplace:
• Qilak LNG founded as markets pushed back on
AKLNG
• Backstop de-risking for all projects, if for
one.
• AEA study re-do on gas to Alaskans
Summary:
• Don't put all eggs in one basket.
MR. TREADWILL, in response to a series of question about
transporting LNG from Qilak to Fairbanks and subsistence
whaling, referenced Harvest's LNG project in Prudhoe Bay that
delivers LNG to Fairbanks in addition to a small gas pipeline
that connects to several pump stations. Alternatively, he said
Qilak may use gas fired power rather than a pipeline and advised
the legislature and state agencies to consider the possibility
of exporting power with fiber optics in addition to pipeline
transportation. He cited a Coast Guard study on port access
routing and talked about the noise generated from an icebreaking
operation which is disruptive to marine mammals, suggesting that
slowing the speed of travel may mitigate disturbance.
Furthermore, he touted the remote sensing technologies that
assist in avoiding impact to animals. In response to a question
from Representative Mears, he acknowledged that a backstop would
be helpful. He explained that strategic and financial investors
are ready to take the market risk and understand the technical
risk. In Alaska, he added, the risk is the permitting process.
He emphasized the importance of paying attention to Russia, a
country that's become a huge factor in the Arctic and an
untrustworthy partner for Alaska's Asian customers.
^PRESENTATION(S): Susitna River Valley "Clean Coal" Plant
PRESENTATION(S): Susitna River Valley "Clean Coal" Plant
2:38:41 PM
CHAIR MCKAY announced that the final order of business would be
the Susitna River Valley "Clean Coal" Plant presentation.
2:40:27 PM
FRANK PASKVAN, Affiliate Professor, Institute of Northern
Engineering, University of Alaska Fairbanks, presented a
PowerPoint [hard copy included in the committee packet],
entitled "Alaska CCUS Activities and Opportunities Roadmap;
Biomass-Coal Fired Power Plant Feasibility Study; ARCCS Project
Status," dated 12/9/24. The carbon capture, utilization, and
storage (CCUS) workgroup's mission is to accelerate commercial
carbon capture projects in Alaska to attract new investments and
create options to decarbonize activities vital to the state's
economy. He played a video that defined carbon capture and
storage (CCS) and shared the following reasons for implementing
CCUS:
• World faces dual challenge of increasing energy
demand and risks of climate change
• IPCC finds the cost for clean energy security
globally more than doubles without CCUS 1
• Also removes other pollutants
• CO2 Use (CCUS) like agriculture can make electricity
net-zero emissions, supports food and energy security
• Coal with CCS can be
• Cleaner than Natural Gas
• Cleaner than Wind with Natural Gas Peakers
MR. PASKVAN outlined the INE's history with CCS and shared a
roadmap of opportunities and needs on the North Slope which is
advantaged by low-cost natural gas, the Interior with its
existing coal plant infrastructure, and Southcentral and its
proximity to port and potential for import. He summarized the
following CCUS activities in Alaska:
Regulatory
AOGCC seeking Class VI injection well primacy from
EPA SB48 May 2023
DNR public comment period open for carbon storage
leasing regulations HB50 July 2024
Federal Funding Awards
DNR: $1M carbon storage geologic database public
outreach partners: UAF-ACEP and ARE
UAF-INE: $11M Alaska Railbelt Carbon Capture and
Sequestration (ARCCS) CarbonSAFE Phase II storage
assessment with EERC and ARI * Evaluates CCS from new
biomass-coal power plant and two natural gas CEA power
plants
ASRC Energy Services (AES), Santos, and Repsol: $3M
Direct Air Capture Pre-Feasibility Study
AES and Santos: $62M North to the Future CCS Hub
CarbonSAFE Phase III subsurface site characterization
and permitting for potential North Slope project site
Additional Studies
US DOE & Japan METI: cross border CCS import to
Alaska feasibility study
Hilcorp, Sumitomo, and K Line signed joint study
agreement for CCS feasibility in Alaska
MR. PASKVAN shared an analysis of the Railbelt power system,
emphasizing that coal is the lowest cost fuel at approximately
$4 per Metric Million British Thermal Unit (MMBtu). The United
States has 27 percent of the world's coal with half of that
based in Alaska. With CCUS, it could be one of the cleanest
sources of energy available.
2:59:51 PM
MR. PASKVAN, in response to a series of questions, outlined the
attractiveness of biomass and coal-fired power with CCS, as it
could provide affordable energy that's reliable, clean, and
secure. He added that with the addition of the waste CO2 and
waste heat made available by such a project, local food security
could be enhanced and energy security risk could be lowered.
3:06:01 PM
MR. PASKVAN continued the presentation with a review of the
Alaska Railbelt Carbon Capture and Storage (ARCCS) project and a
status update. ARCCS is assessing carbon storage hub capacity
by evaluating a 20-mile radius around Beluga River Gas Fiel,
nearby gas fields, and underlying saline aquifers using U.S.
Department of Energy (DOE) CarbonSAFE Phase II framework. The
two potential sources of CO2 under evaluation are a new Terra
energy Center biomass-coal power plant and two Chugach Electric
natural gas power plants in Anchorage. The project is funded by
DOE and the State of Alaska, and the anticipated end date is
September 2026. He described the following anticipated
community benefits:
If CO2storage volume confirmed, anticipated ARCCS
benefits include:
Supports decarbonizing existing natural gas power
plants
Supports developing potentially lower cost Railbelt
energy with long term coal reserves, improves energy
stability, and reduces future Railbelt power price
increases
Provides Statewide rural communities benefits through
Alaska Power Cost Equalization by enabling lower cost
Railbelt energy investments
Provides jobs in construction, operations, technical,
and management in CO2economy
Encourages students to follow a STEM Education path,
preparing themselves to address challenges to improve
energy efficiency and economic and environmental
benefits
3:10:12 PM
MR. PASKVAN, in response to a series of questions from members,
compared ARCCS to Petra Nova and Boundary Dam, adding that it's
not uncommon for new projects to address operating issues and
instabilities and, as time moves on, to make process
modifications and improve efficiency. He shared that Petra Nova
was operating and performing to expectations and plans to
restart after its purchase by a Japanese investor now that the
price of oil has stabilized, making a high-cost oil recovery
project attractive again. He reported that ARCCS anticipates a
2030 deliverable if power purchase agreements move quickly in
the first quarter of 2025. The expected lifespan is 30 years
based on assumptions in the feasibility and demonstrated track
records of long-term operations from coal fired power plants.
3:20:57 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 3:21 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| UAF.HouseResources.20241209.pdf |
HRES 12/9/2024 1:00:00 PM |
|
| Enstar House Resources Presentation 2024-12-09.pdf |
HRES 12/9/2024 1:00:00 PM |
|
| QilakLNG House Resources Presentation 2024.12.9.pdf |
HRES 12/9/2024 1:00:00 PM |