Legislature(2019 - 2020)BUTROVICH 205
03/22/2019 03:30 PM Senate RESOURCES
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| Presentation: Alaska Lng Project Update | |
| Adjourn |
* first hearing in first committee of referral
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+ teleconferenced
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ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
March 22, 2019
3:30 p.m.
MEMBERS PRESENT
Senator Chris Birch, Chair
Senator John Coghill, Vice Chair
Senator Cathy Giessel
Senator Scott Kawasaki
Senator Jesse Kiehl
MEMBERS ABSENT
Senator Lora Reinbold
Senator Click Bishop
COMMITTEE CALENDAR
PRESENTATION: ALASKA LNG PROJECT UPDATE
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
JOE DUBLER, Interim President
Alaska Gasline Development Corporation
Anchorage, Alaska
POSITION STATEMENT: Provided an overview of the Alaska LNG
Project.
FRANK RICHARDS, Senior Vice President, Program Management
Alaska Gasline Development Corporation
Anchorage, Alaska
POSITION STATEMENT: Answered questions regarding the Alaska LNG
Project.
LIEZA WILCOX, Vice President, Commercial and Economics
Alaska Gasline Development Association
Anchorage, Alaska
POSITION STATEMENT: Answered questions regarding the Alaska LNG
Project.
ACTION NARRATIVE
3:30:14 PM
CHAIR CHRIS BIRCH called the Senate Resources Standing Committee
meeting to order at 3:30 p.m. Present at the call to order were
Senators Coghill, Giessel, Kawasaki, Kiehl, and Chair Birch.
^PRESENTATION: Alaska LNG Project Update
PRESENTATION: Alaska LNG Project Update
3:30:49 PM
CHAIR BIRCH announced that the committee will hear an update on
the Alaska Liquefied Natural Gas (LNG) Project by the Alaska
Gasline Development Corporation (AGDC). He noted that AGDC's
presentation is the first time the corporation has come before
the committee since a significant change in leadership and
direction occurred in January 2019 when four of the seven board
members were replaced. He detailed that Doug Smith was elected
to serve as AGDC's new board chairman and Joe Dubler was named
the new interim president of AGDC.
He noted that prior to being named AGDC's interim president in
January 2019, Mr. Dubler held senior AGDC leadership positions
between 2010-2016 including serving as vice president of
commercial operations and chief financial officer. Mr. Dubler
returned to AGDC after serving as executive vice president of
finance and administration for Cook Inlet Housing Authority. Mr.
Dubler also held several positions with the Alaska Housing
Finance Corporation including serving as chief financial officer
where he managed the corporation's $5 billion in total assets
for more than a decade. A certified public accountant, Mr.
Dubler earned a Bachelor of Science in Business Administration
from San Francisco State University.
He explained that today's committee meeting is the first time
that AGDC has had a chance to present the details of a
collaboration agreement that they signed with BP and ExxonMobil
to explore options for advancing the Alaska LNG Project through
Federal Energy Regulatory Commission (FERC) approval and beyond.
He noted that in attendance are Damian Bilbao, Alaska LNG
Business Development Manager for BP Incorporated and Hans
Neidig, Public and Government Affairs Manager, ExxonMobil. Also,
in attendance are Commissioner Designee Bruce Tangeman from the
Department of Revenue and Commissioner Designee Corri Feige with
Department of Natural Resources.
3:32:34 PM
JOE DUBLER, Interim President, Alaska Gasline Development
Corporation (AGDC), Anchorage, Alaska, explained that AGDC
facilitates in the development of the Alaska Standalone Pipeline
Project (ASAP) and the Alaska LNG Project. AGDC is currently
pursing the Alaska LNG Project and detailed its status via his
presentation with the following outline:
• Alaska LNG Status:
o Project scope,
o Budget,
o Path forward,
o Stage-gate process,
o Third-party engagement,
o Challenges.
He explained that ASAP started in 2010 with House Bill 369 that
directed the creation of a study to look at the feasibility of
bringing gas from the Alaska North Slope. The project's impetus
was to study the projected shortfalls of gas from the Cook Inlet
reservoirs and the perceived inability of the reservoirs to
provide enough gas for Southcentral Alaska. In addition, the
Fairbanks area was experiencing very high cost of fuel and air
quality issues with the EPA due to burning coal and wood. ASAP
was designed to bring low cost natural gas to Fairbanks and
Southcentral Alaska.
He explained that AGDC began working on ASAP with House Bill 4
in 2012. AGDC has progressed the project and provided an update
as follows:
• Joint Record of Decision issued by U.S. Army Corps of
Engineers and Bureau of Land Management (March 4, 2019):
o Project as permitted will require a permanent subsidy
to deliver utility grade gas.
o No export component, changing will require a restart
to the permitting process.
o Right-of-way for ASAP project on 299 miles of federal
land.
o ASAP and Alaska LNG share a common path for 80 percent
of the Alaska LNG pipeline route.
o Key decisions from ASAP benefit the Alaska LNG Project
that is under review by the Federal Energy Regulatory
Commission (FERC).
o Allowing for the use of gravel for the project's "work
pads" is a big cost savings.
o "404 Permit" and compensatory mitigation plan.
• No additional ASAP work is anticipated unless there are gas
supply issues in Southcentral Alaska and the cost of
importing LNG is prohibitive.
3:36:05 PM
CHAIR BIRCH asked him to address ASAP's 299 miles of right-of-
way on federal lands and inquired how the right-of-way works. He
asked Mr. Dubler if the current oil pipeline and the proposed
gas pipelines will overlap.
MR. DUBLER answered that the pipelines will roughly follow the
same route, but the right-of-way will not be the same as the
Trans Alaska Pipeline System (TAPS).
SENATOR GIESSEL asked him to explain the federal right-of-way
through Denali National Park and Preserve.
MR. DUBLER explained that U.S. Senator Murkowski got a bill
through that will allow a pipeline through the park without
being subject to the Alaska National Interest Lands Conservation
Act (ANILCA). The legislation will allow for the project to
apply for federal permits progressively rather than all at one
time.
SENATOR GIESSEL pointed out that FERC has stringent rules about
wetlands disturbance and enquired if FERC is going to be okay
with the project's wetlands disturbance.
3:40:43 PM
FRANK RICHARDS, Senior Vice President, Program Management,
Alaska Gasline Development Corporation, Anchorage, Alaska,
replied that FERC does have a concern about the project's
placement of gravel fill in the wetlands, an issue that is based
on FERC's national policy to prevent wetlands degradation. AGDC
is educating FERC on the necessary use of gravel in wetlands
across the North Slope for oil and gas development, roads, and
airports.
He noted that AGDC has gone through the U.S. Army Corps of
Engineers' "404 permit" process regarding placing fill. The U.S.
Army Corps of Engineers has determined what are "jurisdictional
wetlands" that allows the project's design efforts to place an
impact of approximately 9,000 acres of wetlands. The U.S. Army
Corps of Engineers will ultimately come out with a mitigation
requirement of only 300 acres, a very good standard that AGDC is
trying to educate FERC on as well because ASAP has the same
right-of-way for 80 percent of the Alaska LNG's pipeline.
MR. RICHARDS summarized that AGDC will see what FERC comes out
with in their draft Environmental Impact Statement (EIS),
scheduled to be published by June 2019. AGDC hopes that FERC
will have taken into consideration and used the work that the
Army Corps of Engineers has permitted.
MR. DUBLER said ASAP will be set aside for now. AGDC does not
anticipate ASAP ever being developed unless there is a shortage
of gas in Southcentral Alaska and either the larger project does
not get constructed or the cost of importing LNG is
prohibitively high. He opined that if it's cheaper to import LNG
than it is to build a pipeline, the state will likely import
LNG.
SENATOR GIESSEL asked if all of ASAP's permits are in hand.
MR. DUBLER answered no. He explained that approximately 2,000
permits are needed, but the project's right-of-way was attained.
3:43:25 PM
MR. DUBLER said the second project that AGDC has been tasked
with pursuing is the Alaska LNG Project that was enacted under
SB 138. The intent of the Alaska LNG Project is also to deliver
gas to Fairbanks and Southcentral Alaska, but the project also
provides gas to an LNG plant somewhere in Southcentral for
export to help monetize the vast gas resources that are
available in Alaska's North Slope. While ASAP would have helped
Alaskans, the pipeline would not have done much for the state's
treasury and it would not have done much for the North Slope's
100-plus years of available gas. The Alaska LNG Project will
help monetize the North Slope's resource for the benefit of all
Alaskans.
He provided the timeline for the Alaska LNG Project as follows:
• 2014: Project started with four partners: BP, Conoco,
ExxonMobil, and TransCanada.
o TransCanada represented the state's interest in the
upstream (gas treatment plant on the North Slope and
the pipeline).
o AGDC represented the state's interest in the LNG plant
at Nikiski.
o Other partners represented their respective companies
in the entire project.
• 2015: State bought out TransCanada.
• 2016: Alaska LNG Project Pre-Front-End Engineering and
Design (Pre-FEED) completed under the Joint Venture
Agreement (ExxonMobil, BP, ConocoPhillips, AGDC).
o Economics at the time precluded FEED initiation.
• 2016: Project leadership transitioned to AGDC.
• 2017: AGDC initiated FERC permitting process to cross
federal lands.
• 2017-18: Commercial potential defined through nonbinding
agreements.
o 16 letters of interest from various agencies
throughout Asia for gas purchasers or investors.
3:47:27 PM
CHAIR BIRCH asked if the market landscape or economics have
changed since the decision was made in 2016 to not initiate
FEED.
MR. DUBLER answered that the economic changes is what the
governor's 60-day review period has been talking about. AGDC's
engineering group is looking at coming up with a better idea of
what the project's cost will be. AGDC's commercial group is
developing an economic model to analyze the project's cost of
service to show what has been happening between 2016-2019.
SENATOR KAWASAKI asked if the economics in 2016 precluded FEED,
why did AGDC decided to move along with permitting process, and
why did the state decide to de-risk the project if the rest of
the economics decided that the project was not feasible.
MR. DUBLER answered that the project's "first dollars" weigh on
the state to "prime the pump". The first dollars in a project
like a gas pipeline de-risk the regulatory component, something
that an investor is not going to do. Once the regulatory hurdle
is out of the way the state can go to the market and find people
who will notice that the state has an EIS for the entire route
and the project can move forward.
3:49:49 PM
SENATOR GIESSEL addressed the Alaska LNG timeline Mr. Dubler
noted regarding, "2014: Project started with four partners: BP,
Conoco, ExxonMobil, and TransCanada." She recalled that the
companies purchased the land for the LNG plant in the Kenai and
they retained possession of the land during the multiple
transition periods the project has gone through. She asked what
the status is for the land.
MR. DUBLER answered that the status of the land has not changed.
He said he believed that the three partners still own the land
in Kenai. AGDC has continued talking to the partners about the
Kenai land because the land will be critical for the pipeline
project.
SENATOR GIESSEL recalled that ExxonMobil, BP, and Conoco signed
gas supply precedent agreements as well. She asked what the
status is of the agreements.
MR. DUBLER replied that the agreements were non-binding and are
still in existence. He specified that two parties signed the
agreements, not three. He opined that to pursue the agreements
based on the project's current status is not a good investment
until the project has more maturity.
3:51:44 PM
SENATOR KAWASAKI mentioned de-risking and asked what point the
project needs to get to for the producers to become more
comfortable.
MR. DUBLER replied the producers have to answer that question.
He said AGDC will put in another stage gate after the FERC
process in June 2020 to stop, look at the project, and see who
is interested. He emphasized that whether partners come in or
not is a decision each company must make on its own including
the State of Alaska.
SENATOR KAWASAKI asked if AGDC has enough money to get to the
June 2020 deadline. He also asked Mr. Dubler if he believes the
pipeline project is good enough to sell.
MR. DUBLER answered that whether ADGC will have enough money
until the FERC deadline in June 2020 will be addressed later in
the overview. He opined that if there is enough of an incentive
for other entities to invest in the project will depend on the
economics at that time.
3:54:55 PM
MR. DUBLER emphasized that AGDC has recommitted to the original
Alaska LNG design. He noted that AGDC has looked at various
options including a 36-inch diameter pipeline, using existing
facilities in Nikiski, and adding a one-train LNG facility.
He addressed "Alaska LNG Project Scope" as follows:
• Recommit to original Alaska LNG design:
o Transmission lines from Prudhoe Bay and Point Thomson.
o North Slope Gas Treatment Plant:
square4 Designed to deliver 3.4 billion cubic feet of gas
a day into the pipeline.
o 807-mile, 42-inch diameter steel pipeline with
multiple in-state offtakes:
square4 Spur line, not part of the project, will be
coming off for the Fairbanks area.
o Three-train LNG facility at Nikiski to produce 20.1
Million Tonnes Per Annum (MTPA) of LNG, likely to
customers in Asia.
SENATOR KIEHL asked what the plan is for the project's natural
gas liquids.
MR. DUBLER replied that the decision for natural gas liquids
will be a decision for the producers. He assumed that the
liquids will be like what the producers are pulling from Point
Thomson and going into the line.
SENATOR KIEHL asked if the liquids need to be addressed in the
FERC process.
MR. DUBLER answered that he did not believe so.
3:57:28 PM
SENATOR GIESSEL asked what AGDC has considered if the current
project is not economic and has AGDC looked at other
permutations like generating and transmitting electricity or
exporting LNG directly from the North Slope.
MR. DUBLER answered that AGDC has looked at different
permutations like gas-to-liquids (GTL) that converts gas into
fuel as well as compressed natural gas (CNG). AGDC has not
looked at a North Slope facility due to possible wildlife
disruption and ice pack thickness that will not allow for
consistent LNG delivery.
MR. DUBLER addressed "Alaska LNG Investment" and explained that
funds were established when the legislature set the two pipeline
projects in motion. The projects' capital portions were
prefunded for AGDC to annually draw down the capital. At the end
of 2018, the Alaska LNG Project's capital fund had $54.3 million
remaining. For 2019, AGDC is projecting a "$33 million spend"
along with a $5 million re-appropriation to the general fund by
the governor, leaving a fund balance of $15.3 million.
4:02:21 PM
He disclosed that AGDC has done some "belt tightening" since
January 2019 to save money because ASAP is no longer a viable
project and the focus is now on the FERC effort.
He addressed AGDC's "Budget Savings" as follows:
• Reduced 16 "fulltime equivalents" in contract labor for a
savings of $2.5 million.
• Closed leased office space in Houston:
o Office focused on sales contracts.
o The project has not progressed to a point where LNG
sales could be contracted for.
• Reduced legal support and consultants to execute expensive
agreements for a savings of $5 million since January 2019.
SENATOR GIESSEL commented that closing the Houston office is
good news and asked if the Japan office has been closed as well.
MR. DUBLER answered that he intended to close the Tokyo office
but changed his mind when he learned that the office has done an
excellent job of building relationships, relationships that have
taken years to build and foster. The amount of time that the
gentleman is spending in Tokyo will be scaled back. Having
someone on the ground in Tokyo is more cost effective.
4:05:51 PM
SENATOR KAWASAKI mentioned an earlier point regarding "Corporate
structure and decisions focused on Alaska LNG." He recalled that
an AGDC overview last year said lowering the cost of energy for
Alaskans was a top priority. He asked if the AGDC board had
discussed changing the focus on LNG rather than lowering gas
costs for Alaskans.
MR. DUBLER emphasized that their focus is on Alaska LNG, not
necessarily on exporting LNG. The key to getting gas supply cost
for Alaskans as low as possible is with the Alaska LNG Project's
economies of scale using a larger diameter pipeline for both
export and in-state use.
SENATOR KAWASAKI asked if AGDC is no longer pursuing permits,
right-of-way, and engineering on the in-state portion of the gas
pipeline.
MR. DUBLER answered that the Alaska LNG Project is not doing
what Senator Kawasaki described. The project's in-state usage
for Fairbanks and whoever else wants gas will be "one offs" that
will be done when appropriate.
4:08:24 PM
He addressed "Alaska LNG Path Forward" as follows:
• Return to stage-gate process:
o Measured approach to a project.
o Stop at regular intervals to provide another analysis
to make sure the project still makes sense.
o Project currently at Pre-FEED:
square4 15 percent of the project has been designed.
square4 Next step will be between 40 and 50 percent
design completion.
o Small steps are taken in the stage-gate process until
a final investment decision is made when the "real
money" starts coming in after a project has been
determined to be economic.
• Re-engage Alaska Legislature: House and Senate AGDC board
observers:
o AGDC has asked that a member from the House and Senate
participate in board meetings except for executive
sessions.
o Senator Giessel and Representative Knopp have been
selected to attend AGDC board meetings.
• Ascertain economic viability and competitiveness through a
commercial review within 45 days, completion by April 2019.
• Pursue qualified third-party expertise for an integrated
Alaska LNG Project.
• Re-evaluate schedules for FEED, Final Investment Decision
(FID), and construction:
o AGDC will take another look at schedules after the
FERC effort in June 2020.
• Complete FERC process with third-party participation.
4:13:12 PM
CHAIR BIRCH asked him to explain the importance of completing
the FERC process.
MR. DUBLER explained that the EIS has a shelf life of five to
seven years. All the engineering and data is available for the
next party that comes along to start back at day one.
SENATOR GIESSEL noted that the third bullet in the presentation
talks about a thorough commercial review and qualified third-
party expertise. She recalled that Black & Veatch did the
earlier analysis for AGDC and asked if AGDC will employ that
firm again.
MR. DUBLER answered no. He explained that AGDC might use Black &
Veatch or a similar third party to provide LNG pricing views
because antitrust issues prohibit the state as a potential owner
to discuss pricing with the two producers. He said the intent is
to plug the engineers' installed cost numbers into a
modification of the Department of Revenue model for the
midstream part that applies to the pipe and project. That will
be utilized as a shared model for the three parties.
SENATOR GIESSEL mentioned completing the FERC process and asked
if the federal agency is having any discomfort with what AGDC is
proposing.
MR. DUBLER replied no. He said AGDC has not really changed
anything as far as FERC goes. FERC is looking at the actual
project and not how AGDC progresses the project.
SENATOR GIESSEL asked how much the state and producers have
spent so far.
MR. DUBLER answered that he does not have the information. The
pre-FEED effort of the Alaska LNG Project was approximately $500
million.
4:17:57 PM
CHAIR BIRCH asked how AGDC will engage with the Department of
Natural Resources (DNR) and the Department of Revenue (DOR)
moving forward with the project.
MR. DUBLER replied that AGDC has a very good relationship with
both DNR and DOR. DNR makes the decision on whether to take the
royalty on the project's gas as gas-in-kind or gas-in-value.
Gas-in-kind means getting physical delivery in lieu of taking a
royalty for the value of the gas. DOR aids when a producer
decides to pay their taxes with gas rather than dollars.
4:19:56 PM
SENATOR GIESSEL noted that Mr. Dubler had said the EIS from FERC
has a seven-year shelf life. She asked Mr. Richards if there is
a time frame where the project must start or be operational
under the FERC permit.
MR. RICHARDS answered that when FERC provides their
authorization, their authorization is for the ability to
construct an integrated LNG facility. He said he is not aware of
any specific timeline that FERC would say a final investment
decision must be completed for a viable authorization.
SENATOR GIESSEL asked him to confirm that there is no
requirement to begin construction under the FERC authorization
other than the permit is good for five to seven years. She
inquired if the permit can be renewed.
MR. RICHARDS replied that if time progresses and the project is
not advancing, the regulatory agencies could ask for additional
information to supplement their information that potentially
could provide a longer authorization period. He said he will
find out if the timeline requires advancement.
4:22:29 PM
MR. DUBLER addressed "Defined State-Gate Process Success" as
follows:
• In order to continue to a FEED decision, AGDC must:
o Demonstrate a path that delivers sufficient returns to
attract private equity investment and debt financing:
square4 Attainable North Slope gas purchases and LNG
sales.
o Engage qualified project participants with world-class
LNG Project experience to minimize construction,
execution, and operation risks:
square4 AGDC does not have the infrastructure to run an
LNG project.
o Ensure that AGDC's statutory objectives are met which
includes:
square4 Deliver of gas to Alaskans.
square4 Help the state monetize its North Slope
resources.
SENATOR GIESSEL asked him to address private equity investment,
noting that at AGDC's last board meeting Mr. Dubler commented
that China's 75-percent ownership proposition was excessive.
MR. DUBLER answered that the issue is a diversification issue
that depends on a lot of factors. He said he is not comfortable
with anybody owning more than 40 percent of the project,
including the State of Alaska.
4:25:02 PM
He explained that one of his charges when he came back to AGDC
is to engage the producers, something that is very important to
the success of the Alaska LNG Project. He addressed "Third-Party
Engagement" as follows:
• Enlist third-party support to fund, build, and operate
Alaska LNG.
• AGDC, BP, and ExxonMobil entered a non-binding memorandum
of understanding (MOU) in March 2019 to review:
o Commercial:
square4 Economic model and project competitiveness.
square4 Financing options and strategies.
square4 Equity and debt capital costs, Internal Rate of
Return (IRR), and tax structure:
• Important to have an exemption from federal
income tax.
o Technical:
square4 Cost estimates and assisting with the FERC
process:
• Identify opportunities for value engineering
to lower Total Installed Cost (TIC).
• Update schedule to incorporate current
assumptions.
• Assist with timely and technically advanced
responses to obtain permits as rapidly and
cost-effectively as possible.
o Identify and incorporate additional parties to
complete Alaska LNG:
square4 AGDC is not limiting the group to the people that
own gas on the North Slope.
SENATOR GIESSEL noted that the Goldman Sachs Group is contracted
by AGDC for finding equity investors. She asked AGDC to review
its engagement with the Goldman Sachs Group.
4:28:51 PM
LIEZA WILCOX, Vice President, Commercial and Economics, Alaska
Gasline Development Association, Anchorage, Alaska, answered
that AGDC does have a contract with the Goldman Sachs Group and
they have been providing assumptions for the project's economics
and financing. Information from the Goldman Sachs Group can be
used internally by AGDC and the board as part of the internal
economics analysis.
SENATOR GIESSEL asked Mr. Dubler to address the project's
nonbinding MOUs and their confidentiality factors.
MR. DUBLER answered that a decision was made between the parties
that the "spirit of the agreement" will be discussed and not the
content. The MOUs do not contain cost of supply or numerical
things that the producers did not want to share.
He addressed "Challenges" in his overview as follows:
• Many projects worldwide have been built at tidewater;
Alaska LNG's 807-mile pipeline is a cost they do not have
to cover.
• Competition from projects relying on plentiful Henry Hub-
priced gas, current suppliers pursuing contract renewals,
and ambitious developments in new basins:
o Alaska LNG Project has an advantage of being closer to
the Asia market.
o Competition must go through the Panama Canal.
• Increased competition and Henry Hub pricing driving long-
term price projections to around $8.00/MMBtu in Asia, a
challenging threshold for Alaska LNG.
4:33:53 PM
SENATOR KIEHL asked him to address AGDC's financial burn rate
from their drawdown to pay for upcoming costs, salaries, and
rent. He inquired if AGDC's plan is to possibly keep their doors
open through April 2021.
MR. DUBLER answered that the short-term plan is to get through
the 60 days. If analysis shows promise, AGDC will start looking
for third parties to invest in the Alaska LNG Project and to
fund at least part of the effort going forward in 2020. The
legislature and the administration will have to decide if the
state will invest in the project. If the state decides not to
invest and just sell the gas, the state will make some money,
"but gas is not oil". The state will never beat TAPS. The real
money in the project is in the investing part and putting
dollars at risk. He conceded that he does not know if the state
has the dollars to risk.
4:36:09 PM
SENATOR KIEHL asked what the state's stage gates are and their
potential price tags.
MR. DUBLER answered that the state's stage gates are the same as
the project's stage gates because the project's stage gates are
for the owners and the investors in the project which the state
is the only owner and investor in the project. The stage gate
that AGDC's board inserted in January 2019 was added to see if
the project has any hope of being competitive. The next stage
gate will be after the FERC process is complete where the EIS is
de-risked.
SENATOR KIEHL asked what the timeline and costs will be for the
stage gates that he previously described.
MR. DUBLER answered that to finish the FEED effort will be $1
billion and that is why partners are needed.
SENATOR GIESSEL said she appreciated Senator Kiehl's questions
and noted that the legislature wants to make an economic
decision, not a political decision on the Alaska LNG Project.
She recalled that a legislative oil and gas consultant once
said, "You can spend $65 billion on a project if you are willing
to lose $65 billion on a project."
She shared that a recent article published by the Center for
Strategic and International Studies reported that Russia has
partnered with China and invested $27 billion to construct Yamal
LNG in the Arctic to export gas. The Yamal project did not
require a pipeline because the Russian coastline is different
for Alaska with a deeper offshore.
SENATOR GIESSEL said she appreciated that Mr. Dubler pointed out
the project's challenges and the fact that the state must decide
in 60 days that will be based on concrete numbers.
4:39:53 PM
SENATOR KAWASAKI thanked Mr. Dubler for reminding committee
members of the project's huge challenges. He shared that the
International Monetary Fund and the World Bank forecasted
natural gas prices per million British Thermal Units (MMBtu) in
2030 to be $4.00 in the United States, $7.50 in Europe, and
$10.00 in Japan. He said he did not know how the Alaska LNG gets
there economically.
He opined that Japan, being one of Alaska's primary natural gas
customers, also gets LNG from Australia, Russia, Indonesia, and
Malaysia. He said Alaska's partners have considerable capital
tied up throughout the world and noted that ExxonMobil has
partnered in Western Australia's Gorgon LNG project. He asked
why a company like ExxonMobil will want to invest in Alaska if
the state's customer base is going to be same as the Gorgon LNG
project. He inquired if AGDC is reaching outside to other
players. He conceded that the potential partners for the LNG
project are the same partners for oil on the North Slope.
MR. DUBLER reiterated that AGDC is looking at other people
besides the producers on the North Slope. AGDC is looking at
anybody who is willing to invest in the Alaska LNG Project. Oil
and gas companies do have resources and developments around the
world. Investment in the Alaska LNG Project will depend on
getting the stranded gas to market at a price that makes money.
CHAIR BIRCH thanked AGDC for the update on the Alaska LNG
Project.
4:44:10 PM
There being no further business to come before the committee,
Chair Birch adjourned the Senate Resources Standing Committee
meeting at 4:44 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| AGDC SRES Presentation 3.22.19.pdf |
SRES 3/22/2019 3:30:00 PM |
|
| AGDC Response to SRES 3.28.19.pdf |
SRES 3/22/2019 3:30:00 PM |