SB 114-GAS PIPELINE FAIRBANKS SPUR  3:31:13 PM CHAIR GIESSEL announced the consideration of SENATE BILL NO. 114 "An Act relating to an in-state natural gas pipeline developed by the Alaska Gasline Development Corporation; and providing for an effective date." 3:31:33 PM SENATOR MIKE CRONK, District R, Alaska State Legislature, Juneau, Alaska, introduced himself. 3:31:46 PM PAUL MENKE, Staff, Senator Mike Cronk, Alaska State Legislature, Juneau, Alaska, introduced himself. 3:31:50 PM SENATOR CRONK paraphrased the sponsor statement for SB 114: [Original punctuation provided.] Sponsor Statement for SB 114  "An Act relating to an in-state natural gas pipeline developed by the Alaska Gasline Development Corporation; and providing for an effective date." The Alaska Gasline Development Corporation (AGDC) was established in 2010 with the passage of HB 369 in the 26th Legislature. HB 369 included language that stated, "the state's significant reserves of natural gas should be made available on a priority basis in the state to enhance employment opportunities, expand the state's economy, and supply a significant portion of community energy needs." The near- 100,000 people in the Fairbanks North Star Borough pay the highest electricity rates on the Railbelt, according to a report published by the University of Alaska Fairbanks Alaska Center for Energy and Power. If a spur to Fairbanks is not built, the citizens of the Golden Heart City will continue to pay exorbitant electricity costs. Businesses and citizens living in Alaska's 2nd most populous city and the entire Fairbanks North Star Borough desperately need the energy relief that would come from a spur connected to a natural gas pipeline. The AGDC maintains that the development of a spur line to Fairbanks and 34 other identified communities, although technically feasible, would need to be evaluated prior to construction. SB 114 guarantees that an in-state pipeline would include a spur to the City of Fairbanks and the Fairbanks North Star Borough and ensures that all Alaskans can benefit from a natural gas pipeline. SENATOR CRONK paraphrased the sectional analysis for SB 114: [Original punctuation provided.] Sectional Analysis for SB 114  "An Act relating to an in-state natural gas pipeline developed by the Alaska Gasline Development Corporation; and providing for an effective date." Section 1: Amends AS 31.25.005(4) to establish a requirement for the Alaska Gasline Development Corporation to include a direct spur line to the City of Fairbanks and the Fairbanks North Star Borough in the construction of an in-state natural gas pipeline. Section 2: Establishes an immediate effective date. 3:32:52 PM CHAIR GIESSEL noted the zero fiscal note from the Department of Commerce, Community and Economic Development (DCCED), OMB Component Number 2986, dated March 14, 2025. She also noted two documents available for review, including the Alaska Gasline Development Corporation (AGDC) Fact Sheet, the Spatial Energy Burden Analysis of the Fairbanks North Star Borough by the Alaska Center for Energy and Power (ACEP), and two Alaska liquified Natural Gas (LNG) project maps. 3:33:48 PM SENATOR HUGHES expressed support for this project; however, she surmised that the project would require funding. She directed attention to the fiscal note from the Department of Commerce, Community and Economic Development (DCCED), OMB Component Number 2986, dated March 14, 2025, which states that SB 114 would not have a fiscal impact on AGDC or the construction of the Alaska Liquified Natural Gas Project. She asked about funding sources for the Fairbanks spur line project. 3:33:54 PM SENATOR DUNBAR joined the meeting. 3:34:20 PM MR. MENKE explained that SB 114 applies to the in-state gasline portion of the project that ended in 2019. He said the recent announcement from AGDC is for an export line. He shared a recent cost estimate of $150-$200 million. He expressed hope that federal receipts would pay the bulk of the cost and noted federal support. He deferred to AGDC for additional information. 3:35:43 PM FRANK RICHARDS, President, Alaska Gasline Development Corporation (AGDC), Anchorage, Alaska, asked to hear the question again. 3:35:55 PM SENATOR HUGHES said that the Fairbanks spur line is estimated to cost $150-$200 million; however, this is not reflected in the DCCED fiscal note for SB 114. She wondered how the project would be financed. She asked if this cost would be included as part of the Alaska LNG project and would thus become part of the financing put forward by Glenfarne. 3:36:21 PM MR. RICHARDS clarified that the most recent cost estimate for the Fairbanks spur line is $180-$200 million. This cost is all- inclusive with contingency. He stated that it would be a 32-mile pipeline and briefly described its location. He explained that the Alaska LNG project does not include the Fairbanks spur line. He said the Fairbanks spur line was designed as part of the Alaska Stand Alone Pipeline (ASAP) at the request of the State of Alaska. He briefly described the engineering design process, which provided the necessary spur line construction permits from the Department of Natural Resources (DNR). He reiterated that this was designed under the Alaska Stand Alone Pipeline (ASAP) project and is separate from the Alaska LNG project. With respect to using federal receipts to pay for the spur line, he indicated that this would be welcome. He said AGDC recently signed a memorandum of understanding with an Alaskan pipeline owner/operator to take on the development of the Fairbanks spur line. He shared how AGDC would work with that developer by providing access to the permits, etc., and the developer would bear the costs to complete the project. 3:37:05 PM SENATOR CLAMAN joined the meeting. 3:38:23 PM SENATOR HUGHES asked Mr. Richards to repeat his comment regarding the possibility of using federal receipts to help fund the spur line. 3:38:36 PM MR. RICHARDS said he was not aware of a request to the federal administration to cover the cost of the Fairbanks spur line. 3:38:51 PM SENATOR HUGHES asked whether a private company would build [the spur line] and charge a tariff to pay for the project. 3:39:01 PM MR. RICHARDS confirmed this understanding and said the process would be similar to pipeline expansions in southcentral Alaska. He briefly described that process. 3:39:26 PM SENATOR HUGHES asked whether Mr. Richards could share the name of the company. 3:39:38 PM MR. RICHARDS said the company asked that its name remain confidential. However, he noted recent discussions between the company and delegates from Fairbanks. He said AGDC is waiting for the company's approval to share its identity. 3:39:57 PM SENATOR WIELECHOWSKI joined the meeting. 3:40:06 PM SENATOR KAWASAKI commented that the Legislature has discussed many LNG plans over the years. He pointed out that the initial cost estimate for ASAP was close to $1 billion and asked why the current estimate is less. 3:40:49 PM MR. RICHARDS said the Alaska Legislature previously directed AGDC to evaluate the opportunity to develop an in-state LNG pipeline that would include a spur line into Fairbanks (the Stand Alone Pipeline project). Once AGDC completed the front-end engineering and design process, the overall project cost was an estimated $10 billion. This included a $7 billion pipeline, of which the Fairbanks spur line was a part. He explained that at that time the estimated cost of the Fairbanks spur line was $150 million (including contingency). 3:41:53 PM SENATOR KAWASAKI asked about the tariff for Fairbanks residents for a $200 million spur line, assuming the LNG needs of those residents remains the same. 3:42:20 PM MR. RICHARDS said the ASAP spur line was designed to accommodate current and future needs of Fairbanks residents. He estimated the tariff (for existing volumes) would be $1.20-$1.40. He said he would provide the most recent economic evaluation to the committee. 3:42:56 PM SENATOR MYERS directed attention to the Wood McKenzie Study and asked about the estimated gas usage of Fairbanks residents in that study. 3:43:16 PM MR. RICHARDS said he would need to review the report to supply the number. 3:43:35 PM SENATOR MYERS shared his understanding that the Wood Mackenzie study estimated 11 billion cubic feet (bcf)/year into Fairbanks; however, Fairbanks currently uses 1.5 bcf/year. He emphasized the difference between the two. He offered a hypothetical situation and asked about the impact this would have on the price of the gas in Fairbanks and Southcentral Alaska. 3:44:16 PM MR. RICHARDS said he would need to run this through ADGC's economic model to provide accurate data. 3:44:27 PM CHAIR GIESSEL opened public testimony on SB 114. 3:44:58 PM JOMO STEWART, President, Fairbanks Economic Development Corporation, Fairbanks, Alaska, testified in support of SB 114. He emphasized that a spur line into the Fairbanks area would provide residents with access to affordable LNG. He discussed how a previous ADGC development proposal, which bypassed the Fairbanks North Star Borough, placed strain on Fairbanks area residents. He discussed a variety of ways ADGC has shown it does not consider the Fairbanks spur line a priority. He noted that the highest priority of the State of Alaska is to monetize North Slope LNG and to satisfy the energy needs of Southcentral Alaska. He asserted that it would be unconscionable for a trans- Alaska gas line to bypass Fairbanks or render gas too expensive to benefit residents. He stated that SB 114 does not solve the issue of transporting gas to residents at an affordable price; however, it begins an important conversation. 3:47:38 PM GRIER HOPKINS, Mayor, Fairbanks NorthStar Borough, Fairbanks, Alaska, testified in support of SB 114. He said it would be unconscionable if the interior was left out but pointed out that the project is not required to include the Fairbanks spur line. SB 114 creates this requirement. He said it is heartening to hear that a private business is interested in funding and operating the spur line; however, the additional cost is disheartening, considering that Southcentral residents do not pay an additional fee for the Anchorage spur line. He said the interior LNG market is expanding and preparing for the necessary infrastructure. He noted that the Fairbanks North Star Borough is working to increase the customer base and is working to connect the local military bases to natural gas. He emphasized the importance of SB 114. 3:50:48 PM ELENA SUDDUTH, General Manager, Interior Gas Utility, Fairbanks, Alaska, testified in support of SB 114. She said interior Alaska has some of the highest utility costs in the country. This is due in part to the harsh climate and to highly expensive fuel sources. She emphasized the strain this puts on families and businesses, making it difficult for the region to grow. She said the Interior Gas Utility (IGU) serves approximately 1.5 billion cubic feet (bcf) of LNG per year to homes and businesses. She briefly described this process and emphasized the high cost. She said the cost is twice that of Southcentral Alaska. She stated that this cannot continue and referred to the $44 billion spent on the natural gas pipeline. She noted that the Wood Mackenzie study considers 11 bcf/year and said an increase of $1.20 would only be possible if the gas is affordable. She briefly discussed how high costs in interior Alaska could impact costs for all Alaskans. She indicated that IGU is ready and willing to put forth the required effort to develop the necessary infrastructure to support the Fairbanks spur line. She emphasized that the cost of building the spur line cannot be placed on ratepayers. 3:54:06 PM KEN HUCKABA, representing self, Wasilla, Alaska, testified with concerns on SB 114. He mentioned contracts and briefly discussed how Australia was negatively impacted by export contracts. He emphasized that Alaska needs first-take, long-term, low-cost contracts. He expressed concern that the discussion has turned to tariffs. He stated that the agreements, plans, and intentions do not equal contracts. 3:55:55 PM CHAIR GIESEL held public testimony open. 3:56:13 PM CHAIR GIESSEL held SB 114 in committee.