HB 469 - APPROVE SALE ROYALTY OIL TO MAPCO TAPE 98-5, SIDE A Number 1849 CHAIRMAN SANDERS announced the next order of business was HB 469, "An Act approving the sale of Prudhoe Bay Unit royalty oil by the State of Alaska to Mapco Alaska Petroleum, Inc.; and providing for an effective date." CHAIRMAN SANDERS noted it is not his intent to move the bill out of the committee today, but he also realizes that holding the bill will not solve the problem. CHAIRMAN SANDERS called on Jeff Cook from MAPCO Alaska Petroleum Incorporated (MAPCO). Number 1886 JEFF COOK, Vice President, External Affairs and Administration, MAPCO Alaska Petroleum Incorporated, testified in Juneau. He is hear to support HB 469 and to ask that it be passed out of the committee today. There are a number of other committee referrals in the House and it still needs to go on to the Senate. It is very appropriate to talk about the bill in the House Special Committee on Economic Development because it is a bill about economic development and jobs for the city of North Pole, the Fairbanks North Star Borough, the Municipality of Anchorage, and the state of Alaska. It is about confirming the message that Alaska is open for business and economic development. It is about encouraging existing businesses in Alaska to expand. He cited two companies in Fairbanks expanding because of the expansion of the MAPCO refinery in North Pole. The bill is about encouraging one of the few value- added industries in Alaska to expand and export products to international air carriers and to bring money back to Alaska. The expansion will add 14 thousand barrels a day of jet fuel production and 3 thousand barrels a day of diesel fuel. The 14 thousand barrels a day of jet fuel will off set what is now being imported from outside. The bill is about supporting a business that spent $90 million more with all vendors in 1998 than what it took in through gross sales due to capital and construction projects. The bill is about supporting a $70-million refinery for crude now under construction. The bill is about adding 19 new permanent MAPCO employees in Anchorage and Fairbanks, and another 300 employees in MAPCO express stores. It is about supporting 375 construction workers at its peak this summer. Right now, there are over 100 workers on site. It is about supporting a business that spent $465 million last year with 729 Alaskan vendors, educational institutions, and charitable organizations. It is about expanding the $8,351,962 spent with Golden Valley Electric by another $2 million per year to help stabilize electrical rates for commercial and residential consumers in the Interior and Fairbanks. There will be about another 25 railroad cars per day going south from North Pole to Anchorage on the railroad increasing the Alaska Railroad Corporation's revenue by over $10 million a year, adding 20 new employees and new locomotives. It will also increase property taxes to the Fairbanks North Star Borough and city of North Pole. But all of these benefits can only happen if MAPCO has the additional crude oil allowing it to complete and operate its expansion. MR. COOK further stated the city of North Pole, the Fairbanks North Star Borough, and the Fairbanks Chamber of Commerce have all passed resolutions endorsing HB 469. He as attended all of the public meetings and not one person has testified against the bill. This bill is also about a commitment made a year ago between MAPCO and the legislature. As the jet fuel tax was passed last year, MAPCO promised it would expand its refinery and bring economic benefits to Alaska. MAPCO is moving ahead with that promise and now needs the royalty oil contract to complete the commitment. He urged the committee members to send a strong message about economic development in Alaska by passing HB 469 out of the committee today. CHAIRMAN SANDERS called for an at ease. CHAIRMAN SANDER called the meeting back to order. Number 2120 REPRESENTATIVE ALAN AUSTERMAN stated that he doesn't see the cost of fuel directly related to the contract. He wondered whether a tax system could solve some of the problems with the price of gas- o-line in Fairbanks, Anchorage, and around the state. It seems that the contract is important enough to the state to get it passed this year. Number 2149 CHAIRMAN SANDERS stated he thinks that the bill will pass out of the committee the first part of next week. There is plenty of time because soon there will be the one-day notice for scheduling committee meetings. He suggested to Representative Austerman that he talk to the other body to get it to move its version forward in order that the two versions can come together quicker. REPRESENTATIVE AUSTERMAN asked Chairman Sanders whether he has scheduled the bill for next week yet. CHAIRMAN SANDERS replied he has scheduled it for Thursday. REPRESENTATIVE AUSTERMAN responded that is one week from today. REPRESENTATIVE IVAN M. IVAN stated he is also concerned about the bill's scheduling, especially in regards to a conference committee. REPRESENTATIVE AUSTERMAN stated a conference committee could be a good week away too because of the work being done in the Senate. CHAIRMAN SANDERS stated he will talk to the House Finance Committee for scheduling as well. REPRESENTATIVE MARK HODGINS asked Chairman Sanders whether the earliest the bill could be moved out of the committee is one week from today. CHAIRMAN SANDERS replied, "Yes." REPRESENTATIVE AUSTERMAN stated it is further than that because of the deadline for scheduling committee hearings. CHAIRMAN SANDERS stated there could be a meeting on Tuesday. REPRESENTATIVE AUSTERMAN noted it is already passed the scheduling deadline. CHAIRMAN SANDERS asked his staff to see what could be done about the scheduling. He reiterated it is not his intention to move the bill out of the committee today.