Legislature(2007 - 2008)BUTROVICH 205
02/06/2008 03:30 PM Senate RESOURCES
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| Presentation: Transcanada Agia Application - Tony Palmer | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
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ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
February 6, 2008
3:42 p.m.
MEMBERS PRESENT
Senator Charlie Huggins, Chair
Senator Bert Stedman, Vice Chair
Senator Lyda Green
Senator Lesil McGuire
Senator Gary Stevens
Senator Bill Wielechowski
Senator Thomas Wagoner
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Senator Joe Thomas
Senator Gene Therriault
COMMITTEE CALENDAR
Presentation: TransCanada AGIA Application - Tony Palmer
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
TONY PALMER, Vice President
Alaska Business Development
TransCanada
Calgary, Alberta, Canada
POSITION STATEMENT: Gave presentation on TransCanada's
application under the Alaska Gasline Inducement Act (AGIA).
ACTION NARRATIVE
CHAIR CHARLIE HUGGINS called the Senate Resources Standing
Committee meeting to order at 3:42:00 PM. Present at the call
to order were Senators McGuire, Stedman, Wielechowski, Wagoner,
and Chair Huggins. Senators Green and Stevens joined the
meeting shortly thereafter. Also in attendance were Senators
Joe Thomas and Gene Therriault.
^Presentation: TransCanada AGIA Application - Tony Palmer
CHAIR HUGGINS announced the committee would hear a presentation
from TransCanada, which has the only application deemed
conforming to date under the Alaska Gasline Inducement Act
(AGIA) guidelines. Tony Palmer would speak via teleconference,
and Patty Bielawski of Jade North LLC would run the PowerPoint
slide show; a hardcopy version was provided. Chair Huggins
welcomed Alaskans listening via Gavel to Gavel and noted the
AGIA applications could be seen on the state's website.
SENATOR GREEN joined the meeting.
3:43:32 PM
TONY PALMER, Vice President, Alaska Business Development,
TransCanada, introduced himself.
SENATOR STEVENS joined the meeting.
MR. PALMER began with slide 2, showing TransCanada's
credentials, with a table and a map illustrating its existing
system across Canada and the U.S. He said TransCanada's
business primarily is natural gas transmission pipelines. It
owns 36,500 miles of pipe. The proposed project is 1,700 miles,
about 5 percent of its existing mileage. TransCanada is a large
Canadian pipeline company, but it also has one of the largest
U.S. interstate pipelines, some 12,000 miles of pipe; 750 miles
is proposed for this project. Compression held currently totals
some 3.2 million horsepower; initial compression on the proposed
pipeline would be about 100,000 horsepower, a small component.
MR. PALMER drew attention to throughput volumes moved daily
across North America to market, 15 billion cubic feet a day
(Bcfd). Occasionally, the same gas is moved twice, so it
actually is about 30 Bcfd, but Mr. Palmer said he'd removed any
double counting. The proposed project is hoped to be 4.5 Bcfd,
one-third the existing volume; the final volume will be
determined in an open season.
3:47:14 PM
MR. PALMER highlighted projects TransCanada has completed. The
company was initiated 50 years ago to build a pipeline from
Alberta to Ontario and Quebec across challenging terrain, some
2,300 miles. In the 1990s it completed 7,000 miles of pipeline,
expanding its existing system in Canada and the U.S., completing
it on schedule and within 0.6 percent of budget. It is now
proceeding with the Keystone oil pipeline, going east from
Alberta to about Winnipeg and then south to Illinois and
Oklahoma; about 2,150 miles, it will have 1,380 miles of new
pipe in the U.S. and a Canadian component that is a conversion
of one of TransCanada's original gas pipelines.
MR. PALMER emphasized that TransCanada doesn't own any of the
gas it moves across North America. It doesn't propose to own
any of the Alaskan gas. It is an independent pipeline company
in the business of providing service to its customers that want
to transport their gas. This arrangement is used for
transporting natural gas across Canada and the U.S. by other
pipeline companies as well.
3:50:20 PM
MR. PALMER turned to slide 3, an example of TransCanada's record
of developing a basin, a series of maps of Alberta from 1958 to
2005. Whereas there were 3 customers in 1958 and a couple
hundred miles of pipe, now there are more than 300 customers and
15,000 miles of pipe. Gas can be transported into or out of
TransCanada's system from most of Alberta, the exceptions being
the far northeast corner, which isn't a particularly gas-prone
area, and the national parks. He expressed hope that Alaskans
wants similar growth, to transport the potential 135-
235 trillion cubic feet (Tcf) of gas.
MR. PALMER told members TransCanada's growth occurred under an
independent pipeline model, with rolled-in tolls. The initial
customers in 1958 have grown, and TransCanada now has the
original customers plus new ones, both large and small,
including customers that reside in Alberta as well as marketers,
local distribution companies, and other corporations that want
to transport gas across North America.
3:53:14 PM
MR. PALMER addressed TransCanada's financial capability,
slide 4. He said estimated capital expenditures (CAPEX) for
this project in 2007 dollars total $26 billion. Adding an
allowance for funds used during construction (AFUDC), along with
cost escalation for when the money needs to actually be spent
over the next decade, the final cost is $33 billion.
MR. PALMER noted that during construction TransCanada proposes
using the 30 percent equity ratio that the state has allowed as
a maximum; that is about $10 billion. To be competitive, it
will reduce the equity ratio to 25 percent once the line goes
into service, which he would discuss later. But the overall
equity requirement is about $10 billion, including AFUDC and
cost escalation.
MR. PALMER turned to TransCanada's current net cash flow; he
indicate this is shown in 2007 dollars, based on the assumption
that its business won't continue to grow over the next 7-10
years, though that isn't hoped to be the case. He compared the
current annual cash flow of $2.3 billion with the actual
expenditures of equity expected over the construction period for
the project and logistics. He pointed out that only in 2017, as
this project goes into service, does it approach the net cash
flow of TransCanada.
MR. PALMER noted this assumes TransCanada owns the gas treatment
plant (GTP). But it prefers not to. TransCanada believes other
parties in Alaska - either the three existing North Slope
producers or others - may wish to own that facility. The graphs
on slide 4 show how the equity requirement is reduced if a third
party owns the GTP. TransCanada has also offered shippers
participation in the project equity if they commit threshold
volumes in the initial open season; that would reduce
TransCanada's equity commitment as well.
MR. PALMER suggested third parties may wish to become equity
partners with TransCanada at some point. Also, the slide
doesn't identify that the company could always go to the capital
market to raise equity, which it did last year when it bought a
10,000-mile U.S. pipeline; TransCanada financed that initially
using its internal cash flow and two months later went to the
market for capital funding, a normal process in any business.
MR. PALMER summarized that TransCanada is capable of financing
the equity for this project; the debt would be third-party
funding. The loan guarantee offered by the U.S. government will
help in obtaining debt financing and improve the interest rate.
3:57:12 PM
MR. PALMER discussed slide 5, noting it came straight from
TransCanada's AGIA application. It highlights the proposed
pipeline route from Prudhoe Bay to the British Columbia border
and then continuing on to interconnect with the prebuilt portion
in the center of Alberta. About 11 Bcfd of gas moves through
TransCanada's Alberta system.
MR. PALMER explained that when parties speak of the Alberta Hub,
that is TransCanada's 15,000-mile pipeline system shown a couple
of slides ago. "Once you're on that system, you can trade gas
for free," he noted. The system's 11 Bcfd is traded five or six
times a day, so 60-70 Bcfd is traded financially at the Alberta
Hub each day, making it the most liquid hub in North America.
MR. PALMER pointed out that from the Alberta Hub there is access
to North American markets coast to coast on TransCanada's
existing pipelines. Gas can be moved as far east as Boston and
New York, through the Midwest, and to the Pacific Northwest and
California. That will be available to Alaskan gas, as it is
available to Western Canadian gas today.
3:59:30 PM
MR. PALMER continued with slide 5, saying TransCanada forecasts
that by 2017, when Alaskan gas flows, there'll be spare takeaway
capacity on those systems sufficient for the full Alaskan
volumes. The current capacity of pipelines leaving Alberta is
about 15 Bcfd. In ten years, as a result of relatively flat to
declining Western Canadian production, and also because of
rising demand in Western Canada, there'll be spare capacity on
that system, about a third of the existing capacity.
MR. PALMER told members Canadian exports today are around
9 Bcfd; TransCanada expects that to be reduced by the time
Alaskan gas flows, but Canadian exports into the U.S. will
continue. Clearly, Alaskan gas is targeted to go to the U.S.
Once it enters the Alberta Hub it will be commingled, as happens
with all gas in existing Alberta pipelines. There won't be a
new market for 4.5 Bcfd of Alaskan gas in Alberta; the growth in
Alberta demand will be served by Alberta production.
MR. PALMER said Alaskan gas instead will flow on through to U.S.
Lower 48 markets, as always contemplated. TransCanada believes
it will move on existing infrastructure, the lowest-cost
alternative. A third-party study by the Canadian Energy
Research Institute (CERI), recently published, concludes that
Alaskan gas will benefit from higher netbacks and lower costs by
integrating into the Western Canadian infrastructure, rather
than building a new pipeline directly to Chicago or
"incrementing" the Alliance Pipeline. He opined that CERI's
analysis is publicly available for a fee, saying its conclusion
is similar to TransCanada's analysis over the last few years.
MR. PALMER informed members that one-third of the proposed
pipeline is in service as prebuild. Constructed to move Western
Canadian gas in advance of the northern section of the project
and completed in 1981-1982 under Canada's Northern Pipeline Act,
it currently moves about 3 Bcfd.
4:02:46 PM
SENATOR WAGONER asked about the compressor stations required for
4.3 Bcfd and 5.9 Bcfd.
MR. PALMER replied he didn't have those numbers with him, but
they're in TransCanada's application. He recalled there'd be 6
in Canada and said he'd look for the number within Alaska and
relay it. There would be a very modest amount of compression,
100,000 horsepower, to move the initial 4.5 Bcfd. The fuel
ratio at that level is somewhere in the 2.1-2.3 percent range,
very modest. As TransCanada continues to build up the
facilities with expansions through 5.9 Bcfd, it would merely be
adding compression. There would be no pipeline looping until it
got beyond 5.9 Bcfd. He offered to provide the exact number of
compressors if requested to do so.
SENATOR WAGONER said the numbers were 6 and 7. He recalled
prior testimony suggesting it would take 71 compressor stations.
MR. PALMER assured Senator Wagoner it would take nowhere near 71
compressors to move this much gas through the pipeline
TransCanada has designed. He recalled it would be 6 in Canada
and perhaps 9-10 in Alaska, maybe 15-20 initially for 4.5 Bcfd.
TransCanada has had this design several years, and he'd seen
press reports about testimony projecting fuel ratios somewhere
in the 8 percent range on the pipeline itself. Mr. Palmer said
that clearly is wrong. There is significant fuel at the GTP.
For just the pipeline from Prudhoe Bay to Alberta that he'd
described, however, it is approximately 2.3 percent fuel for
4.5 Bcfd, a very modest fuel ratio.
CHAIR HUGGINS welcomed Senators Joe Thomas and Gene Therriault,
noting they'd been present for some time.
4:06:31 PM
MR. PALMER turned to the current project schedule, slide 6,
which had the following dates: April 2008, AGIA license issued;
September 2009, open season complete; June 2010, Federal Energy
Regulatory Commission (FERC) pre-filing request; December 2011,
FERC filing; August 2013, FERC CPCN; January 2014, project
sanction; June 2015, on-site construction; and November 2017,
project in service. Mr. Palmer explained that although the date
for obtaining the AGIA license wasn't known, an April date was
used; all other dates are triggered by that.
MR. PALMER said there is some flexibility to move it back, day
by day, from April. However, this summer's field season is
needed to hold to this aggressive schedule. If the AGIA license
isn't granted until well into the summer, this field season
might be lost. That is significant. Certain things need to be
done in summertime in northern climates, and he'd advised
parties of this privately as well. It is in the state's hands
as to when an application may be recommended and approved for a
license; that timing will drive the remainder of the schedule.
MR. PALMER noted if the AGIA license is granted in April,
TransCanada has indicated an open season can be completed by
September 2009, 18 months later. This is significantly better
than AGIA's required 36 months to conclude an open season.
Discounting speculation he'd seen in the press that TransCanada
is shortcutting that process, he said that isn't the case.
MR. PALMER explained that TransCanada has what is described in
engineering terms as a class 5 cost estimate, the norm at this
stage. By the time it goes to an open season, it will have a
standard class 4 engineering estimate. He emphasized that this
is TransCanada's business and that the company has been looking
at the Canadian side of this project for 30 years, has
significant and valuable information to use, and understands how
to do this. Once it gets through the FERC certification
process, TransCanada will have a class 3 cost estimate and will
be proceeding with the project, assuming it has customers.
4:09:50 PM
MR. PALMER pointed out that AGIA requires committing to an open
season timeframe, which TransCanada has done on an aggressive
basis. It also requires committing to a FERC pre-filing date,
which TransCanada has set for June 2010, triggered from the
aforementioned April date, with the FERC filing by December
2011. From preliminary discussions with FERC staff, he gave the
understanding that FERC may wish the June 2010 date to be
advanced for pre-filing or that there'd be initial discussions
before then, which TransCanada is prepared to consider.
MR. PALMER said beyond that timeframe it is in FERC's hands. If
FERC decides TransCanada has met the conditions on a timely
basis, it will grant the license. Assuming TransCanada has
customers and has achieved the regulatory approvals required,
the project would be in service in less than 10 years, by
November 2017.
4:11:22 PM
MR. PALMER turned to AGIA "must haves" and TransCanada's
response in its application, slides 7-8. He said TransCanada
tried to file on a basis that would be deemed complete by the
State of Alaska. He reminded members that last year TransCanada
had opposed a provision requiring a company that had a failed
open season to continue through the FERC certification process,
but the legislature had passed that as a requirement. To apply,
therefore, TransCanada had to compromise on that issue and agree
to move forward in the event of a failed open season.
MR. PALMER provided highlights. He said the design is best
suited for 4.5 Bcfd of initial capacity, but final volumes will
be determined in the open season. If TransCanada is successful
in attracting that much gas, it will be an inexpensive pipeline
to expand by one-third of the volume, using compression only; he
alluded to wording on slide 7 that says the initial design is
expandable to 5.9 Bcfd with compression only.
MR. PALMER said the Canadian norm is rolled-in tolls, averaging
the original cost plus expansion. TransCanada is familiar with
that system and as the pipeline sponsor would put forward to
FERC the AGIA requirement, 115 percent of the initial tolls
within the Alaskan section of the project. And although
TransCanada prefers to have a third party build the GTP,
TransCanada is prepared to build it if necessary.
4:14:59 PM
SENATOR WIELECHOWSKI observed that TransCanada proposes a 48-
inch pipeline through Alaska and Canada. He asked: If Alaskan
consumers want to take out 0.5 Bcfd at Delta Junction, how would
that be addressed?
MR. PALMER replied if TransCanada knows in advance - around the
time of the initial open season - that Alaskans want to take
0.5 Bcfd at Delta Junction and knows the volumes to Canada, then
it would be taken into account in the initial design. If it is
4.5 Bcfd to Alberta plus 0.5 Bcfd taken out at Delta Junction,
TransCanada would still build the same system, but would add
compressors north of Delta Junction.
SENATOR WIELECHOWSKI surmised that 0.5 Bcfd wouldn't count
towards the 115 percent with respect to rolled-in rates.
MR. PALMER responded that TransCanada has proposed a separate
Alaskan rate - a weighted average, if acceptable to FERC and
Alaskans - of only the Alaskan component of the pipeline for the
average distance moved within Alaska. For example, if Alaskan
gas on average moved 70 percent of the distance through Alaska,
then Alaskan customers would pay for the gas treatment plant,
which they'd be using, plus 70 percent of the initial cost of
the Alaskan component of the pipeline; a party taking service at
the Yukon-Alaska border would pay 100 percent of the toll.
MR. PALMER said if the weighted average isn't acceptable, the
actual distance for each individual customer will be used. The
aforementioned are the two methodologies used in the pipeline
business to move gas within a certain zone or region. While the
weighted average is simpler and many believe it is fairer, some
prefer using the actual distance for each customer.
4:19:01 PM
SENATOR WIELECHOWSKI asked what would happen if Alaskans want
1 Bcfd or 1.5 Bcfd for in-state use, including natural gas for
an Agrium type of industry, heating, and so on. He noted that
would be one-quarter of the throughput.
MR. PALMER replied TransCanada would look to provide service to
customers where they request it. But TransCanada believes the
project works best economically at about 4.5 Bcfd moving to
Canada, with the tolls he'd provided; if additional incremental
volumes go to Alaskans, which TransCanada expects, that won't
change the tolls much for any party.
MR. PALMER said if 1.5 Bcfd is moved to an Alaskan location and
only 3 Bcfd goes to Alberta, however, then the tolls he'd
provided to Alberta clearly are too low. The project would have
lost significant economies of scale. TransCanada would have to
look at whether a 48-inch pipe is the correct size downstream of
the Alaskan delivery point, and whether customers are prepared
to pay that much. TransCanada doesn't propose to restrict
customers as to where they go, in any way. Rather, the company
proposes to design a system that moves the gas to locations
customers have requested.
SENATOR STEDMAN referred to rolled-in rates and asked how
Canadian and U.S. regulators look at the return on equity that
is allocated. He also asked Mr. Palmer's opinion as to why the
U.S. doesn't do fully rolled-in rates like Canada does.
4:22:04 PM
MR. PALMER addressed the second question. He explained that for
decades, Canadian regulators have used rolled-in rates as the
norm for any expansion. The costs before the expansion are
rolled in or averaged with the costs of an expansion; that is
true whether the tolls go up or down, which depends on the type
of facilities put in place and the vintage of the facilities
they're being incremented to. That has been successful for
Canada, which has a basin that is farthest from the North
American market.
MR. PALMER said in the U.S., by contrast, the norm for many
years has been to roll in the tolls and average the costs if the
costs have gone down because of an expansion. If the tolls have
gone up, sometimes there has been a test of 105 percent, but not
always. If tolls rise, they usually aren't rolled in. Instead,
incremental tolls are applied for the new customer. He declined
to go through the rationales, saying there'd be differences of
opinion as to why FERC has chosen to do that.
MR. PALMER pointed out that when the open season regulations
were established for this particular Alaskan project about three
years ago, however, FERC decided to use a rebuttable presumption
of rolled-in tolls. It will consider what the pipeline sponsor
and customers put forward.
4:24:22 PM
MR. PALMER turned to Senator Stedman's first question, saying
the return on equity in the U.S. versus Canada on most pipelines
has been different for the last several years. In many cases,
Canadian pipelines haven't been at risk if they lose volumes;
dollars to be collected generally, but not always, are recovered
from the remaining customers on the system. That is partly why
Canada has had a lower rate of return on its pipeline system.
MR. PALMER said, in addition, for many years Canada's National
Energy Board (NEB) required pipelines to come back annually for
a review of their rates of return. As interest rates have
generically fallen during periods of high inflation, those
annual reviews have generally resulted in lower rates of return.
MR. PALMER reported in the U.S. the general case is this: If a
pipeline loses a customer, in the short term - until there is
another rate case - it cannot pass that on to existing
customers. If many customers withdraw, usually the pipeline
applies to FERC for different tolls. The U.S.-based rate of
return on equity has usually been higher than for Canadian
pipelines for several years. In many cases, U.S. pipelines
aren't required to come back for a review of their rate of
return on the same regular basis as for Canadian pipelines.
4:26:30 PM
SENATOR WIELECHOWSKI asked what the company's experience has
been regarding cost overruns.
MR. PALMER replied in the 1990s, TransCanada built 7,000 miles
of pipeline involving some $14 billion of capital, doing it on
schedule and within 0.6 percent of budget. He opined that the
company has a formidable record in constructing natural gas
transmission lines in North America. TransCanada also has built
a number of pipelines elsewhere in the world. It doesn't have a
perfect record, but Mr. Palmer said no company does. For
example, there have been cost increases in the estimates as the
oil and gas business has heated up in the last few years.
MR. PALMER said TransCanada is proud of its construction record
and results. In terms of controlling costs on pipelines, he
believes its record has been superior in North America. But he
recognizes concern that TransCanada needs to be highly motivated
to manage costs. Thus during today's presentation he would
highlight incentives or disincentives that provide motivation to
hit the cost target.
4:28:39 PM
SENATOR WIELECHOWSKI alluded to recent testimony from Little
Susitna Construction Company and Sinopec, noting it indicated
China is in a better position to get 800 miles' worth of the
required steel and that it might take 10 years to get heavier-
grade steel for 1,700 miles of line. He asked: Do you see
problems in getting the steel to build this pipeline?
MR. PALMER said he hadn't heard that testimony, but had read a
press report; to his understanding, it related to X70 steel. He
explained that TransCanada proposes using X80 steel, meaning its
ultimate strength is up to 80,000 pounds per square inch. This
is the standard pipe used in TransCanada's system since the mid-
1990s. With 1,700 or 1,800 miles of X80 pipe in operation
today, TransCanada is familiar with it and with large-diameter
pipe, having 1,500 to 2,000 miles of 48-inch pipe in the ground.
MR. PALMER expressed confidence that there will be a steel
supply for X80 pipe in the timeframe projected. In preparing
the bid, TransCanada specifically talked to a number of steel
suppliers. Because the pipe won't be ordered for several years,
there is no specific pricing or commitments. But the interest
is there to supply it.
CHAIR HUGGINS asked if TransCanada has the steel source yet for
the Keystone pipeline.
MR. PALMER answered affirmatively, noting because it's an oil
pipeline it runs at a much lower pressure. Parties are
experiencing challenges in obtaining pipe because of the massive
expansion of natural gas pipelines in the Lower 48 and the oil
pipelines coming out Canada. It is difficult today to source
steel for large projects, but TransCanada has a steel supply for
Keystone. Returning to AGIA "must haves," he said TransCanada
has agreed to local-hire provisions and all those components.
4:33:21 PM
MR. PALMER addressed TransCanada's competitive response to AGIA,
slide 9, which showed the following points:
TransCanada bid to win - competitive enhancements
- Initial system design with inexpensive expandability
- Gas treatment plant ownership, if no 3rd party
willing to build
- Equity opportunity for shippers committing gas in
initial open season
- 75% debt vs. 70% minimum limit in AGIA
- Toll reduction of $0.09/mmbtu
- TransCanada's return reduction in event of capital
cost overruns
- Fort Nelson Option upside
- Toll reduction of $0.13-$0.18/mmbtu
- LNG alternative if insufficient gas commitments
through Canada
- Creative roles for US Govt. - "bridge shipper" and
allocation of portion of $18 billion loan guarantee
to any capital cost overruns
MR. PALMER told members he'd expected comprehensive competition,
and TransCanada had bid to win, putting forward incentives
intended to attract Alaskan customers and improve the likelihood
of success as well as the proposal's net present value. The
company stretched in several areas to do this.
MR. PALMER addressed the above points. He said this high-
pressure design uses X80 pipe, providing significant efficiency
with respect to fuel and steel; the fuel ratio is very low for a
1,700 mile pipeline. TransCanada's willingness to build the GTP
if no third party is willing is a step out for the company.
Also, TransCanada has heard from a number of shippers that want
the opportunity to own part of this pipeline. Thus in the
initial open season parties that commit a threshold volume will
have that opportunity, another stretch that he hopes will
encourage shippers to commit their gas to the project.
MR. PALMER noted another incentive is that TransCanada will
apply the 70 percent debt ratio during construction, but upon
completion of the project will refinance 5 percent. This means
a toll reduction of 9 cents per mmbtu, just under 3 percent, a
significant reduction for a customer. Although TransCanada and
its shareholders will have less equity in this project - which
pipelines generally are reluctant to do - TransCanada is doing
this to be competitive.
4:37:48 PM
MR. PALMER returned attention to cost control. He reiterated
that TransCanada is proud of its record. Since TransCanada
wants to not only move the initial 35 Tcf of proven North Slope
gas, but also expand the system, there is a strong incentive to
have low costs. High costs make it much more difficult to
attract new customers. However, potential customers and others
have said they'd like TransCanada to have direct financial
incentives or disincentives if there is a cost overrun; they
want interests to be aligned in this regard.
MR. PALMER said TransCanada therefore proposed in its
application the following: If there is a cost overrun, it will
take up to a 2 percent reduction in its rate of return for the
first five years of operation, a significant hit on
TransCanada's bottom line. The rate of return would be
triggered off a 10-year treasury note, which in November would
have yielded about 14 percent, though now it's about
13.25 percent. TransCanada will be highly motivated to control
costs. The final item TransCanada has proposed in order to
provide alignment on costs involves the U.S. loan guarantee.
4:39:40 PM
MR. PALMER opined that gas entering the existing infrastructure
at the Alberta Hub is the most beneficial for Alaskans, Alaskan
shippers, and Western Canadians. But TransCanada wants
additional motivation to have this project proceed and also go
through Canada and into the Alberta system. If 4.5 Bcfd of
Alaskan gas goes into the Alberta system, that lowers tolls for
all Western Canadian producers. Canada's toll structure would
pass that benefit through to customers. While Alaskans would
benefit by having a significantly cheaper system compared with a
line to Chicago, he indicated Alberta and Western Canadian
producers would benefit by $10 billion in the first 15 years.
MR. PALMER said TransCanada hasn't known whether the project
would proceed, go through Canada, or integrate the gas into
Alberta's system. To achieve those, perhaps Western Canadian
producers should be prepared to share some of that $10 billion
of value with Alaskans, which the so-called Fort Nelson upside
would do. If that is a successful structure, some $3 billion in
the first 15 years, of the $10 billion he'd described, would
shift to Alaskan producers and shippers, away from Alberta
shippers. He said this is another competitive response
TransCanada is prepared to sponsor with Canadian regulators. If
it's successful, the tolls mentioned earlier would be reduced by
an additional 13-18 cents.
4:43:56 PM
MR. PALMER continued with slide 9, turning to the liquefied
natural gas (LNG) alternative. He emphasized that TransCanada
has been a proponent of the Alaskan project through Canada and
on to the Lower 48 for many years; it is believed to be the
superior project for Alaskans, Canadians, and the company.
TransCanada wants the investment opportunity, wants the gas into
its system, and believes this aligns with Alaskans who want this
project soon, want it to go through this system, and want it
ultimately to expand.
MR. PALMER noted, however, that TransCanada additionally wanted
to be competitive with any AGIA applicants proposing an LNG
alternative. TransCanada also had heard concern that there
might not be sufficient gas committed to Canada. Thus the
company's LNG alternative is this: If insufficient gas is
committed to Canada to make the project economic but sufficient
gas is committed to Valdez - which TransCanada used as a proxy
for an LNG project - then TransCanada would be prepared to build
a pipeline to that point and build the gas treatment plant as
well, if necessary. TransCanada hadn't done the economics on
liquefaction, ships, regasification facilities, or markets. If
customers want that service, they'd be in a position to do that.
MR. PALMER addressed the final point on slide 9, saying
TransCanada was asked under AGIA to look at ways to improve the
probability of success. These aren't conditions to the
application, but are creative concepts to assist the project and
improve the likelihood of success. If TransCanada is granted an
AGIA license, it is possible that parties won't commit their gas
in an open season, despite the aforementioned initiatives. Thus
the company has tried to determine how to meet customers' needs.
4:46:29 PM
MR. PALMER spoke to the notion that a cost overrun results in
more money for the company. He said TransCanada looks to make a
rate of return, not just more dollars, and it would see a
penalty in that instance. The U.S. government approved a
significant support proposal for the project through an
$18 billion loan guarantee 3.5 years ago. TransCanada suggests
if part of that could be allocated to cover any potential cost
overrun, that would mean a number of things.
MR. PALMER said, first, debt financing for overruns is the
cheapest form of financing, cheaper than debt and equity, and
certainly cheaper than equity alone. Second, it would mean
TransCanada isn't investing or receiving another dollar for any
cost overrun; in fact, there'd be a penalty from the hit on the
rate of return just described. Third, if the U.S. government
were prepared to recover its moneys from any cost overrun only
in the event of a surcharge in the toll, when gas prices at a
hub - say, the Alberta Hub, but it could be downstream in the
Lower 48 - are above a certain threshold level, then potential
customers could see what the toll would be.
MR. PALMER surmised this would be highly attractive for
customers looking at committing gas and credit to this project.
He said TransCanada hopes this will be looked at creatively by
the U.S. government and supported by the State of Alaska in
terms of going with TransCanada to Washington, D.C., to propose
this if an AGIA license is granted. But it wasn't a condition.
4:49:14 PM
MR. PALMER turned to the concept of a "bridge shipper." He said
the question is this: If the parties that currently control the
gas and other potential shippers don't commit their gas in an
open season, despite the best efforts of TransCanada and others,
is there another way to advance the project? He referred to his
previous testimony that this project needs customers and/or
credit in order to actually construct a pipeline.
MR. PALMER said TransCanada believes this project would break
open the largest stranded domestic storehouse of gas in the U.S.
The thought is this: Perhaps the U.S. government would be
prepared to step up in the event of a failed open season,
committing to sign an agreement to ensure the project goes
forward and meets the 2017 in-service date.
MR. PALMER explained that this would mean a significantly longer
timeframe for existing leaseholders to consider whether to
commit gas; it also would incentivize parties that aren't
actively looking for natural gas today. He said if it's
believed that this project will be in the money, the gas doesn't
need to be found on the North Slope today. There is 8.5 Bcfd
produced every day, which is very different from having a basin
with no gas production.
MR. PALMER said the U.S. government has been supportive of
public infrastructure such as highways, railways, and airports,
and is supportive of domestic gas production, having provided
Section 29 tax credits for coalbed methane and shale gas, $1 per
mmbtu for 15 years; it is expected that those two sources of gas
- generally termed unconventional gas - will be about 50 percent
of domestic production by 2010. Although those tax credits were
controversial in the past, they seem to have supported
development of those domestic sources.
MR. PALMER suggested that what is missing for Alaskan gas isn't
a tax credit for the actual gas, but support for the pipeline.
If the initiatives already put forward aren't sufficient to make
the project proceed, TransCanada wants to put this proposal
before the U.S. government for consideration. Although there
have been very preliminary discussions with staffers,
TransCanada doesn't believe it is in a position to inquire in
Washington, D.C., until it has the AGIA license; it also
acknowledges this would be under consideration for some time.
He emphasized this wasn't a condition of its AGIA application.
4:54:17 PM
MR. PALMER pointed out that the project economics, slide 10, are
based on economic assumptions provided by the state and other
assumptions TransCanada made; if those change, different
conclusions will be reached. The state had advised TransCanada
to use the U.S. Energy Information Administration (EIA) gas
price forecasts for the project; the slide references dollars
per mmbtu.
MR. PALMER explained that TransCanada had to bring that back to
an Alberta price; in 2018, in nominal dollars, that is shown on
the slide as $6.53, which coincidentally is about what gas
prices are this winter in Alberta. The assumption is for no
inflation in gas prices over the next decade. The annual
average for 25 years, $9.92 on the slide, shows gas prices
escalating from there.
MR. PALMER noted slide 10 also shows the pipeline plus the GTP
tolls; in dollars per mmbtu, this is seen in TransCanada's
application. The first year, including fuel, it would be $2.76,
and the annual average would be $3.03 because fuel prices are
driven off the U.S. EIA gas price forecast. The pipeline toll
is flat in nominal dollars, at $2.41, but the fuel component
rises as gas prices rise.
MR. PALMER pointed out that the first year of service, 2018,
taking $6.53 and deducting $2.76 - if the gas price forecast is
correct and the costs are accurate - the producers would get a
$3.75 netback for gas they're currently producing at Prudhoe Bay
and other gas that might come into the pipeline. From that
$3.75, they'd pay their own production costs, take their
profits, and share with the state and other tax-collecting
bodies in order to come up with a net amount.
4:57:11 PM
MR. PALMER turned to stakeholders' value, noting this uses
formulas and methodologies the state described for TransCanada;
in certain cases, the company made assumptions. After taxes,
the producers would get $183 billion over 25 years, $4.7 billion
in 2018, and an annual average of $7.3 billion. The State of
Alaska would get $115 billion over 25 years, $2.5 billion in
2018, and an annual average of $4.6 billion.
MR. PALMER indicated these are direct dollars from the gas
production and the pipeline such as royalties, production tax,
income tax, property tax, and any other revenues. It would
amount to $4,000 the first year for each Alaskan, and for the
annual average it would be $7,000.
MR. PALMER drew attention to benefits for the U.S. government:
$46 billion over 25 years, $1.2 billion in 2018, and an annual
average of $1.8 billion. Numbers shown for TransCanada are
$16 billion over 25 years, $1.3 billion in 2018, and an annual
average of $0.6 billion. He pointed out that the pipeline
depreciates over time, and thus TransCanada would receive more
money in the first year than on average; by the last year, the
pipeline would be fully depreciated.
MR. PALMER told members these numbers assume an initial 4.5 Bcfd
and no expansion of the pipeline, although TransCanada's
application provides some numbers for expansions. These aren't
indirect numbers for the value of employment, exploration, and
so on, but are strictly for moving the existing volumes,
4.5 Bcfd if that is committed to the pipe, and also for taxes.
4:59:48 PM
MR. PALMER offered clarifications on recent questions, reading
the following from slide 11:
- Relative Timing of Alaska/Mackenzie Projects?
- Is TransCanada's AGIA application conditional on US
Govt. support for "bridge shipper" and loan
guarantee concepts?
- Is the AGIA project subject to ANNGTC's historical
liabilities?
- What is TransCanada's position regarding upstream
fiscal terms?
MR. PALMER noted there were separate slides for each topic. He
said ANNGTC was the original partnership. He addressed
Alaska/Mackenzie timing, slide 12, which showed the following:
- Mackenzie Valley pipeline scheduled to be in-service
by 2014
- TransCanada currently plays a modest role in that
project
- TransCanada's proposed schedule for the Alaska
pipeline has project in-service by 2017
- If both target dates can be achieved, there is
significant opportunity for equipment/labor
synergies and cost-savings on the Mackenzie, and the
Canadian section of the Alaska Pipeline
MR. PALMER elaborated, saying the Mackenzie Valley pipeline is
to move Northern Canadian gas; TransCanada has the right to own
about 5 percent. There are three years between the target dates
for that and the Alaskan project. If they stay on schedule, at
least on the Canadian side, there is a significant opportunity
to use the same equipment and much of the same labor, lowering
the cost. Labor on the Alaskan project will be much higher,
since Alaskan labor will be required for that component, as
always contemplated.
5:02:09 PM
MR. PALMER highlighted how the U.S. government could support the
project, slide 13, which specified that these are ideas to
improve the probability of success, not conditions to
TransCanada's AGIA application. The points on slide 13 were:
- $18 billion Loan Guarantee Approved in 2004
- Allocate a portion to fund any capital cost
overruns
- Least cost option for customers
- Ensure TransCanada will not earn extra return if
costs increase
- Debt servicing through toll surcharge, to be paid
only when gas prices exceed a pre-determined
threshold price
- "Bridge Shipper"
- US Govt. could ensure a successful initial Open
Season for the project by acting as a bridge
shipper (i.e, by executing a firm transportation
agreement)
- Once the full initial capacity of the pipeline is
contracted by 3rd party shippers, the US Govt.'s
obligations would be terminated
- US Govt. role would significantly reduce the risk
and lead time of the project by permitting access
to private capital markets and a firm in-service
date
MR. PALMER emphasized that the U.S. government could decide not
to pursue these ideas or may want to pursue others. TransCanada
believes these ideas should be considered. If not, TransCanada
will continue to move forward and meet the requirements of its
AGIA application. He noted details were provided earlier.
5:03:25 PM
MR. PALMER turned to TransCanada's AGIA applicants, slide 14,
which had the following points:
- Foothills Pipe Lines Ltd. in Canada
- TransCanada Alaska Company, LLC in Alaska
- Separate legal entity from ANNGTC
- No liability to ANNGTC or Withdrawn Partners
- New start in Alaska - no utilization of any
ANNGTC assets (certificate, Right-of-Way,
permits, engineering, geotechnical, etc.)
- TransCanada's AGIA application commits to never
including any potential ANNGTC liability in AGIA
project tolls
MR. PALMER explained that Foothills Pipe Lines Ltd. is the
traditional applicant for the project that owns the Canadian
assets. Saying there are no significant issues there, he added,
"In fact, there are benefits to the project proceeding under
that Act because we have a single-window regulatory agency." He
said the entity put forward in Alaska is TransCanada Alaska
Company, LLC, separate from the original partnership.
MR. PALMER highlighted the other points, adding that the cost
estimates and schedule start from scratch, in effect taking a
very conservative view. He expressed hope that these would
allay any concerns.
5:04:47 PM
MR. PALMER turned to ANNGTC, slide 15, which had the following
points that he paraphrased:
- Formed in 1970s to construct Alaska Section
- 11 original partners
- All have withdrawn except two TransCanada
subsidiaries
- Those subsidiaries are not AGIA applicants
- No duties to Withdrawn Partners - Current or
Future
- Neither the two remaining TransCanada partners,
nor any other TransCanada entity, owes any duty
to the Withdrawn Partners
- Withdrawn partners forfeited rights to be
treated as a partner
- Entitled only to contractual right to
payment
- If and when ANNGTC builds the pipeline,
and
- If payment would not pose undue hardship
on ANNGTC
- No duty to pursue the project on behalf of
Withdrawn Partners
- No TransCanada entity is prohibited from pursuing a
different project
MR. PALMER explained that TransCanada and ANNGTC had decided in
the fall of 2007 that the latter wasn't a viable entity for the
project; ANNGTC is not going to build the pipeline. He
indicated with the enabling U.S. federal legislation passed 3.5
years ago - the Alaska Natural Gas Pipeline Act (ANGPA), under
which TransCanada's application is going forward - any party can
do that.
5:06:08 PM
MR. PALMER addressed upstream fiscal terms, slide 16, which had
the following points:
- TransCanada's AGIA obligations are not conditional
on a review of Alaska's upstream fiscal terms.
- TransCanada acknowledges that this issue is between
the State and natural gas producers.
- TransCanada requests that the State resolve
upstream fiscal terms for natural gas prior to
the initial open season.
MR. PALMER added that TransCanada hopes to hold that open season
in the summer-fall of 2009. If the State of Alaska decides it
needs to change the natural gas production tax or other upstream
regimes, those could be reviewed next year during the regular
session or some other time.
5:07:01 PM
SENATOR WIELECHOWSKI noted TransCanada's calculations show the
producers earning $7.3 billion a year before upstream costs. He
asked whether, in Mr. Palmer's experience, Alaska's upstream
terms need to be fixed.
MR. PALMER replied he wasn't in a position to comment on that.
TransCanada only asks that the State of Alaska has considered
what is in place and is either confident it's an appropriate
system or has undertaken to review it before the initial open
season.
MR. PALMER explained that, for simplification, TransCanada's
analysis assumed a flat 25 percent upstream gas production tax;
this appears in the application. However, Alaska's current
structure includes some progressivity. For upstream gas
production costs, about which TransCanada has no knowledge, the
assumption used was $1.50 plus inflation. Mr. Palmer pointed
out that Alaska's legislature and administration have a better
view of those than TransCanada has.
5:08:57 PM
SENATOR STEDMAN surmised Mr. Palmer believes the aforementioned
is an obstacle.
MR. PALMER replied they've heard debate and press discussion,
and those parties most affected - the state and the producers -
have expressed themselves. TransCanada isn't providing advice
on this matter. Rather, TransCanada is asking that by the time
there is an open season the state will at least have considered
whether it has an attractive system.
CHAIR HUGGINS suggested there will be a 15- to 16-month window
to address that issue.
MR. PALMER affirmed that, predicting if a license is granted in
April, an open season will be held in the summer-fall of 2009.
5:10:43 PM
MR. PALMER touched on the next steps, slide 17. He said public
comment continues to March 6; then the administration will make
a recommendation, although the timeframe isn't certain; if there
is a positive recommendation, the legislature will review it and
decide whether to approve it; and if it is approved, an AGIA
license may be granted this year. He then wrapped up with a
summary, slide 18, paraphrasing the following points:
- Last year the Administration and Legislature
established AGIA as Alaska's transparent process to
advance a gas pipeline project
- TransCanada submitted a through, creative,
competitive and complete AGIA application
- TransCanada has the credentials and capacity to
build, own, operate and expand the project
- If selected as the AGIA Licensee, TransCanada's
obligations are not conditional on the US Govt.
approving TransCanada's "bridge shipper" or loan
guarantee concepts, nor on the State renegotiating
upstream fiscal terms
- The proposed TransCanada project will not be saddled
with a "$9 billion liability"
- TransCanada's AGIA applicants have committed that
in the unlikely event there ever is any
liability, it will not be included in project
tolls.
5:12:56 PM
SENATOR WAGONER recalled testimony a week ago from someone who
prefers a later open season, rather than 18 months after
licensing by the state. Surmising a time crunch was partly to
blame because that party is currently exploring for gas, he said
the testimony was that the later the open season is, the more
accurate the tariff will be. He asked whether that is correct.
MR. PALMER answered that TransCanada believes Alaska also wants
this project to move forward expeditiously. Thus TransCanada
believes moving quickly to an open season is appropriate. The
company has committed to hold open seasons every two years after
the initial one. So if a party was unable to commit in the
initial open season but could commit two years later,
TransCanada would look to accommodate that party in the initial
pipeline capacity; this would depend on the initial volumes and
incremental volumes, however, and it couldn't be guaranteed.
MR. PALMER suggested that waiting a year or two won't give
better costs. The same amount of work has to be done, and
spreading it over a longer time doesn't accelerate the project.
The concern on this project has always been that after a
successful open season it will be eight years before it goes
into service. Deferring the open season and thus the rest of
the schedule just moves the project back a year or two, which he
surmised isn't to anyone's benefit.
5:15:11 PM
SENATOR WAGONER asked why oil and gas producers generally don't
like to own or operate pipelines.
MR. PALMER replied that traditionally North American gas
pipelines have been built, owned, and operated by independent
pipelines; in relatively rare instances, producers decide to
commit their equity to own and build a pipeline. Most producers
have a higher cost of capital, and their equity shareholders
look for a higher rate of return than can be obtained with a
pipeline; hence they usually invest in riskier projects,
generally exploration and development of gas and/or oil.
MR. PALMER said pipeline companies such as TransCanada, by
contrast, are pleased to get a regulated rate of return and
relatively low variability. Their shareholders reward them for
finding investment opportunities that often take a lower rate of
return but have lower variability or volatility than exploration
and production provide.
MR. PALMER highlighted a second reason: In most basins, there
isn't a controlling producer or group of producers. There
usually are tens or hundreds of producers. Bringing such a
group together to own a pipeline can be complex. And if two or
three producers control the leases or production for a majority
of the gas, governments often are motivated to ensure there are
rules so other parties can become shippers on the pipeline,
beyond those initial shippers, on a fair and open basis.
5:18:12 PM
SENATOR WIELECHOWSKI said TransCanada obviously is a successful
company and didn't get that way by building pipelines to areas
where gas couldn't be obtained. He asked how confident
TransCanada is that it can fill the proposed pipeline with gas
and have a successful open season.
MR. PALMER replied TransCanada wrestled with that mightily. It
likely will cost over $600 million to go through an open season
and the FERC certification process. The company understands and
appreciates that the government is prepared to contribute a
significant share of that, but there are significant differences
between the upsides for the State of Alaska and TransCanada.
MR. PALMER said macro economic issues were looked at first. In
order to advance any project, one must at least believe it is
economic. TransCanada looked at gas price forecasts; demand;
how much the project likely would cost; and whether Alaskan gas
could compete with other supplies, both domestic and
international, in moving gas to the Lower 48 and Canada.
MR. PALMER reported that the commitment of governments to
advance this project was looked at next. He said no commercial
company can advance this project on its own. It's no different
from any other long-line, new basin pipeline, which no company
can do alone. No company owns the land between Prudhoe Bay and
the Lower 48. Cooperation will be needed from governments.
MR. PALMER told members TransCanada also had looked at the
commitment of the administration and the legislature last year
in passing AGIA, as well as public expressions by a number of
parties over the last few years. TransCanada's assessment was
that Alaskans want this project to proceed expeditiously. He
opined that there is support from the U.S. government and that
Canada will be committed to advance the project, since Canada
has obligations to the United States in a treaty for this
specific project. Those were considerations.
MR. PALMER said micro economic components were then looked at,
such as whether TransCanada has the credentials and capability
to advance this project and to put forward proposals likely to
be acceptable and attractive to producers, other potential
shippers, and governments. When his company considered all
those, it decided to risk its time, money, and talents to
advance the project.
5:21:46 PM
MR. PALMER, in response to Senator Stedman, said TransCanada has
been a pipeline company for some 50 years, and electricity
generation is a much younger but growing component, about 33-40
percent of its business.
SENATOR STEDMAN asked how TransCanada would handle the potential
risk of getting an AGIA license, going through an open season -
even if it fails - and then going to FERC, when another entity
may go outside of AGIA to FERC for such a certificate.
MR. PALMER answered that TransCanada's obligation, if it's
granted the AGIA license, is to hold an open season; the
application describes what that involves. If that is
unsuccessful despite the best efforts of the company and the
governments, it still would move to FERC pre-filing and
certification.
MR. PALMER said TransCanada isn't aware of another party that
has put forward a FERC application or intends to, although some
parties have indicated they may wish to do so if they have an
upstream fiscal arrangement with the State of Alaska. There is
always risk. If another party did go forward, he surmised FERC
would have to consider a competitive process or whether it was
prepared to grant more than one certificate.
5:25:21 PM
SENATOR STEDMAN returned to the timeline, slide 6. He asked
Mr. Palmer to address potential litigation to get access to the
gas if there aren't sufficient quantities to make the proposal
viable. He also gave his understanding that megaprojects around
the world go through decision "gates" before recommitting to go
to the next step, to ensure the project won't derail. He
inquired about such gates for this proposal.
MR. PALMER replied TransCanada is obliged, pursuant to AGIA, to
move forward through the FERC application and filing. There are
no gates up to that point. However, AGIA doesn't require that
the pipeline be built. If TransCanada has customers and has met
those tests, then there are such gates, set forth in its
application, for after the AGIA obligations have been met.
MR. PALMER addressed whether the state would pursue other
actions to obtain gas if the gas wasn't committed. He said
TransCanada will continue through FERC certification, as
required. It is up to the state to decide what to do if there
is a failed open season; TransCanada wouldn't be a party to that
decision, but would continue to seek customers, as described in
its application. TransCanada won't complete the project in 2017
if there are no customers or credit; AGIA doesn't require it and
TransCanada's application doesn't contemplate it.
5:28:33 PM
SENATOR STEDMAN said it appears only TransCanada's proposal met
the AGIA criteria and thus there aren't competing projects. He
asked how the state would do a fiscal comparison to see if that
proposal is in the state's best interest.
MR. PALMER replied he'd tried to describe the competitive forces
TransCanada felt last fall. This is the norm for any request
for proposals (RFP) process; TransCanada has participated in
those across the world, and he has competed 20-30 times. The
competition usually occurs in advance of the submission by any
party, because one company isn't aware of what others will put
forward. A company that wants to win must put forward a best
and final offer or else risk losing what may be a good project.
MR. PALMER said TransCanada has competed for this project. It
put forward its best proposal, a strong one. The state may wish
to consider what others submitted; those are publicly available
on the state's web site and would at least provide benchmarks.
Noting TransCanada's application describes its credentials and
record, he added that the state can test the assumptions put
forward by either the administration or TransCanada.
SENATOR STEDMAN recalled testimony in prior years about who was
able to construct a particular project, with conflicting
opinions. He said clearly TransCanada has the ability to handle
this project once there is gas committed so there can be
financing. He asked: Isn't TransCanada's biggest advantage
that the AGIA license puts it in the mix when agreements come
together to access gas from the three major producers?
MR. PALMER expressed hope that TransCanada will continue to
convince Alaskans about its abilities regarding this project.
The company believes it continues to have a strong position for
the Canadian portion because of its traditional rights and
position. However, Alaskans have chosen the AGIA process as the
mechanism. As he'd testified for several years, TransCanada
believes there should be a coming together of the three North
Slope producers, the state, and TransCanada.
MR. PALMER reiterated that TransCanada's AGIA application
proposes that parties that commit their gas in the initial open
season will have the opportunity to have equity in the project.
TransCanada believes a mechanism can be used in the initial open
season so initial shippers may become equity owners.
TransCanada seeks to have the project go forward with base
shippers committed to the project.
SENATOR STEDMAN clarified that he was glad TransCanada applied
and was trying to look at how holding that AGIA license may
protect its interests.
MR. PALMER replied that clearly TransCanada has decided this
would be a good investment, even though it would risk
significant time, money, and talent. Thus TransCanada is
participating in the AGIA process, hoping to win and optimistic
that this project will be a success.
CHAIR HUGGINS thanked Mr. Palmer. He recognized Jerry Burnett
from the administration and thanked him as well.
There being no further business to come before the committee,
Chair Huggins adjourned the Senate Resources Standing Committee
meeting at 5:37:18 PM.
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