SB 215-GASLINE DEV. CORP: IN-STATE GAS PIPELINE  4:05:16 PM CO-CHAIR PASKVAN announced consideration of SB 215 and a continuation of the Monday, March 26, presentation. SCOTT HEYWORTH, Chair, Alaska Natural Gas Development Authority (ANGDA), Anchorage, AK, said he had two contractors with him to give an overview of what ANGDA had done with the Beluga to Fairbanks (B2F) project. 4:07:05 PM He said about four years ago, Governor Palin called a press conference and asked ANGDA and Enstar to run a "project," which was a gasline from Cook Inlet to Fairbanks. ANGDA had one meeting with Enstar who pulled away, but ANGDA continued and started looking at the Ft. Richardson/Glenn/TAPS corridor route. They felt that it had the most population with three military bases, Golden Valley Electric and the Flint Hills Refinery. They already had a state unconditional right-of-way lease from Glennallen to Palmer and it would be very easy to work in the existing TAPS corridor, recently valued at $12 million by Legislative Budget and Audit (LB&A). ANGDA ran out of funding, but completed 80 to 90 percent of the route. 4:08:47 PM CO-CHAIR PASKVAN wanted to know if the following statement in a December 2009 report was still true: There are sufficient additional natural gas reserves in the Cook Inlet region for development and delivery to Fairbanks via the B2F Pipeline. Therefore, the supply of gas to existing consumers of Cook Inlet Natural Gas would not be adversely impacted. MR. HEYWORTH responded that he didn't know how much faith he had in that statement even four years ago, but today he believed there was plenty of gas in Cook Inlet, 3.5 tcf or 10-15 years of gas according to Furie. Cook Inlet is supposed to have three jack-up rigs working in it this summer, and there is a good chance a lot more gas will be found if they get lucky like Furie did in striking a big find on the very first well. 4:10:46 PM CO-CHAIR WAGONER related that Furie said on Wednesday that their estimate was down to 750 bcf/d and they still hadn't flow tested the well or done a lot of logs on it. And only two jack-up rigs will be in Cook Inlet this summer, the Endeavor and Spartan 151; there never was a third. MR. HEYWORTH remarked that he was disappointed about going down to 750 bcf. CO-CHAIR PASKVAN asked him to elaborate a little more on why the B2F project was not completed. MR. HEYWORTH replied that a couple of things coincided. As ANGDA got started on Governor Palin's B2F project, a parallel instate gasline committee was started in HB 269; its first chairman was Harry Noah who passed it off to Bob Swenson, who passed it off to Dan Fauske. The other group was strongly for the Parks Highway; but ANGDA ran out of funds and support and started receiving a lot of resistance from the Army Corps of Engineers and the Bureau of Land Management (BLM). The state decided to get behind Mr. Fauske and HB 9. 4:14:17 PM SENATOR FRENCH asked how much longer the Glenn/Richardson route is than the Parks Highway route. MR. HEYWORTH answered that he wanted help in answering that from Mr. Odsather. 4:14:55 PM RICHARD "O.D." ODSATHER, Odsather International Marketing, ANGDA contractor, Fairbanks, AK, answered that one line, Glennallen to Delta to North Pole, is 30 miles shorter than the other. The distance for the Glenn Highway/Tok/North Pole route was about 437 miles and the distance for the Milepost 39/Dunbar/Fort Greely route was 467 miles; three military bases were involved. SENATOR FRENCH said he wanted to compare a line from Big Lake to Fairbanks versus a line from Fairbanks to the nearest pipeline coming down the Richardson and the Glenn Highways. MR. ODSATHER responded to subtract 25 miles from the 467 miles for going up through Dunbar, because it's 25 miles from Big Lake to Milepost 38 on the Enstar line. SENATOR FRENCH asked him how many pipeline miles it was from Big Lake to Fairbanks up the Parks Highway saying he came up with 271 miles. Mr. Odsather agreed. SENATOR FRENCH asked how many miles it was from the nearest pipeline touching the grid that connects Anchorage to Fairbanks through the Glenn/Richardson route if its 271 miles from Big Lake to Fairbanks. MR. ODSATHER responded that they had to back up a bit, because to make them equal, you have to go from Fairbanks up to Fort Greely to pick up the three military bases. SENATOR FRENCH asked why the three military bases have to be included. MR. ODSATHER explained that the B2F line includes Fort Wainwright, Eielson Air Force Base and Fort Greely as anchor tenants. SENATOR FRENCH asked Mr. Odsather if he was saying that he had added enough pipe to the 271 miles from Big Lake to Fairbanks to touch the three bases (if they all agreed that is something that has to be done). MR. ODSATHER replied "Yes, sir...if you want to make them equal, you have to do that." 4:20:25 PM CO-CHAIR WAGONER said Mr. Odsather was saying you have to add the distance from Fairbanks back down to the bases using the Parks Highway route, but you don't have to add the bases. First, they need to figure out what it takes to get to Fairbanks and then if the bases want the gas they can build a supply line from wherever the hub is established. SENATOR FRENCH asked how big the pipe would be. MR. ODSATHER replied 24 inches from Palmer to Delta and 10 inches from Delta to North Pole. 4:24:02 PM CO-CHAIR PASKVAN asked if the 24 inch pipe from Delta into Palmer was for the lateral from the anticipated 48 inch line going to Canada. MR. ODSATHER answered yes and he added that it's a totally reversible pipeline. CO-CHAIR PASKVAN asked if building a gasline next to a railroad (the Parks route) would save any money. MR. ODSATHER answered if you can get the permits from the highway or the railroad, fine, but it may be difficult going through Denali State Park where the highway goes through an "omnibus road" and its subsurface is owned by the federal government. So, you might have to negotiate with the federal government. CO-CHAIR PASKVAN asked if it was good or bad to have a railroad close by. 4:25:40 PM MR. ODSATHER replied that personally he would move it off to the edge of the road, because that is the greatest thaw area and therefore the least stable. 4:26:06 PM SENATOR JOE THOMAS, Alaska State Legislature, Juneau, AK, co- sponsor of SB 215, observed that the B2F line was considered important at one time and a reduced-size plastic pipe was going to go from Delta into Fairbanks, because they were anticipating that a line would come down through Fairbanks anyhow. So, you put in the plastic line and when the big line was built you could remove the plastic one. The Parks Highway is 365 miles from Anchorage to Fairbanks and you're roughly 30 some miles north of that. So if you run right into Fairbanks, you subtract 30 miles off of that and come up with a 335 mile pipeline. SENATOR FRENCH said he was a big supporter of this project and gas pipelines in general, but the North Slope gas project is so big that it's hard to pinpoint when it will actually happen, and that was why they were considering taking existing gas production to where was needed in the Interior. He asked if they were thinking about using plastic pipe as a short-term fix. MR. HEYWORTH replied that ANGDA had researched PVC pipe and it could be used if it was going down the Glenn/Richardson/TAPS corridor where it's very close to either base. But to be fair, an existing Enstar line goes to Big Lake and it has an 18 inch tap at the end of it. You could come off of that and proceed north on the Parks Highway and come into Dunbar and Nenana and get into Fairbanks and North Pole. But what he really wanted to convey to the committee was the idea that if the ASAP pipeline comes off the North Slope from Livengood down through Minto to Dunbar and then cuts over to the UAA campus with the 39-mile lateral, then 20-mile increments gets you to Fairbanks, North Pole and Eielson. The lateral could be a smaller 10 inch pipeline coming all the way down to and through Delta Junction. He asked why you would come down just to Dunbar if you start with the lateral going all the up to North Pole and not just continue down the Glenn/Richardson at that point and hit all the military bases: Livengood to Dunbar, east to Golden Valley and North Pole and then pick up the ANGDA route to Palmer. It's a much cheaper pipeline that catches everybody. SENATOR FRENCH said he appreciated his answer and that he was just trying to get up to speed by thinking of the quickest, cheapest solution. SENATOR THOMAS said realistically the only base you would leave out if you came from mile 39 and went up the Parks Highway by building a 340 mile pipeline would be Fort Greely. A plastic pipe would probably last long enough if an instate line of some type would be installed at a later date. SENATOR FRENCH said it would be interesting to know how much gas can move through 12 inch plastic pipe, because he didn't how long Fairbanks was going to wait to get a steel pipeline from the North Slope - and he didn't think they could wait that long. SENATOR THOMAS replied that someone probably has the calculation for a temporary fix to Fairbanks, but he thought a 10 or 12 inch pipe would be more than enough. 4:33:57 PM SENATOR FRENCH said every single house in Fairbanks would have to convert and distribution lines would have to be laid and wondered how long that would take no matter how the gas gets there. SENATOR THOMAS agreed. CO-CHAIR WAGONER said they should establish a location for a hub. Pipelines don't put all the supply lines out there; they let whoever has the certificate of public convenience do it. The main thing is to get the gas to that area and let everyone else worry about the distribution. CO-CHAIR PASKVAN agreed and said the line between Fairbanks and Big Lake does not need to be 24 inches. That's only if you want to pre construct the lateral to hook up with a future large diameter line going to Valdez or through Canada. CO-CHAIR WAGONER said there should be just one line to take care of all the needs. [SB 215 was held in committee.]