Legislature(2003 - 2004)
04/07/2004 08:02 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
April 7, 2004
8:02 a.m.
MEMBERS PRESENT
Representative Bruce Weyhrauch, Chair
Representative Jim Holm, Vice Chair
Representative Bob Lynn
Representative Paul Seaton
Representative Max Gruenberg
MEMBERS ABSENT
Representative John Coghill
Representative Ethan Berkowitz
OTHER LEGISLATORS PRESENT
Representative Hugh Fate
COMMITTEE CALENDAR
^OVERVIEW OF STRANDED GAS ACT
TAPES
04-56, SIDE(S) A & B
04-57, SIDE(S) A
CHAIR BRUCE WEYHRAUCH convened the meeting of the House State
Affairs Standing Committee at 8:02 a.m.
SUMMARY OF INFORMATION
CHAIR WEYHRAUCH called the overview hearing on the subject of
the Stranded Gas Development Act to order at 8:02 a.m. He
specified that testimony would revolve around development of the
state's natural gas resource, and whether the legislature should
consider any public policy changes to the Stranded Gas Act.
WILSON CONDON, Chief Assistant Attorney General - Statewide
Section Supervisor, Oil, Gas & Mining Section, Civil Division
(Anchorage), Department of Law, explained the intent of the
Stranded Gas Act, which is to provide a framework for
modification to the state fiscal system as it might be
applicable to the stranded gas resource.
MR. CONDON, in response to a question from Chair Weyhrauch,
explained contractor hiring by the State of Alaska under Section
240(a) of the Stranded Gas Act. Mr. Condon referenced one such
contractor, Dr. Pedro Van Muers, who is the lead person on the
negotiating team. The other team members are two assistant
Attorneys General, Department of Natural Resources staff, staff
of the Division of Oil and Gas, and himself.
MR. CONDON responded to an opinion from Representative Holm
regarding the makeup of the negotiating team. He reviewed with
the committee the qualifications and aptitude of Dr. Van Muers
and the suitability of the other negotiators on the team.
Others, named by Mr. Condon, on the team are Bob Loeffler, a
State of Alaska employee who has worked in Oil and Gas for over
25 years; and Jay Lukens of Lukens Energy, an energy consulting
corporation.
MARTY RUTHERFORD, Deputy Commissioner, Department of Natural
Resources, named the remaining members of the negotiating team:
Larry Strause and Bonnie Harris from the Department of Law;
Steve Porter, Roger Marx, Dan Dickinson and some of his staff
from the Department of Revenue; Marty Rutherford and Dr. Mark
Myers, Director of Oil and gas from the Department of Natural
Resources; Sean Parnell and Dr. Anthony Scott also from the
Division of Oil and Gas.
CHAIR WEYHRAUCH commented about a "blue ribbon commission" to
look at these issues and assess Stranded Gas Projects.
MR. CONDON replied that the state would be happy to add depth to
the team once resources are available.
Mr. CONDON responded to Chair Weyhrauch's comments on the
reimbursement agreement portion of the Stranded Gas Act by
saying that, no applicant had said [he or she] wouldn't pay for
reimbursement, prior to MidAmerican, and that the state had no
experts on staff at that time to address that portion of the
application.
MR. CONDON responded to Representative Berkowitiz' comments
regarding exclusivity by saying he has not looked into the
precise legal boundaries of the exclusivity clause of the Act.
He went on say he is not exactly sure of the definition as it
relates to the Stranded Gas Act. He agreed with Representative
Berkowitz that it would be helpful to have a written opinion as
to the meaning of exclusivity. Mr. Condon, in response to
Representative Berkowitz' question as to whether the economic
analysis in the Alaska North Slope Gas Commercialization team
report to the governor in 1998 was still accurate, said that
some of it would still be accurate today. There is not a current
study on the subject. Dr. Van Muers is prepared to share a
different analysis than the one he did in 1996. With respect to
Representative Berkowitz' statement regarding the economic limit
factor (ELF), Mr. Condon responded that the conclusion regarding
the tax-free treatment afforded by the ELF being prorated
between oil and gas based on relative volumes produced is still
true and impacts negotiations with the producers.
MR. CONDON answered a question from Representative Fate
regarding exclusivity, by saying that he believes Representative
Fate is correct in terms of final, exclusive arrangements.
CHAIR WEYHRAUCH asked the audience to submit any written
comments with regard to the issue of stranded gas, to the
committee for distribution to other legislators. (none was
received).
MR. CONDON responded to Representative Seaton's questions
regarding whether Attorney General Renkes and the Governor's
Chief of Staff, Jim Clark, are part of the negotiating team by
saying that they are part of the "Gas Cabinet", which meets
periodically to review the negotiating team's work. He said the
negotiating team reports to the Gas Cabinet.
MR. CONDON confirmed he was the commissioner of the Department
of Revenue at the time the department completed a report
entitled, "State Financial Participation in an Alaska Natural
Gas Pipeline." He also confirmed the cost of the report was
between $100,0000 and $200,000.
MR. CONDON, in response to Representative Holm, said he was sure
Dr. Van Muers had negotiated a gas contract, but he could not
say that anyone else on the team had ever done so. Mr. Condon
went on to respond to Representative Holm's comments regarding
the lack of negotiating expertise on the current team by saying
he believes the current team is well prepared, but that he would
like to see more members added.
Committee members and Representative Fate offered their final
comments on the subject of the Stranded Gas Act.
ANNOUNCEMENTS
There were no announcements.
COMMITTEE ACTION
The committee took no action.
ADJOURNMENT
CHAIR WEYHRAUCH adjourned the hearing at 9:15 a.m.
NOTE: The meeting was recorded and handwritten log notes were
taken. A copy of the tape(s) and log notes may be obtained by
contacting the House Records Office at State Capitol, Room 3,
Juneau, Alaska 99801 (mailing address), (907) 465-2214, and
after adjournment of the second session of the Twenty-Third
Alaska State Legislature this information may be obtained by
contacting the Legislative Reference Library at (907) 465-3808.
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