HB 83 - NATURAL GAS RESOURCES DEVELOPMENT [Contains discussion of SB 164] Number 0765 CHAIR OGAN announced that the final order of business would be HOUSE BILL NO. 83, "An Act relating to natural gas pipelines, providing a statutory definition for the portion of the constitutional statement of policy on resource development as applicable to the development and transportation of the state's natural gas reserves, amending Acts relating to construction of natural gas pipelines to require conformance to the requirements of the statutory definition, and amending the standards applicable to determining whether a proposed new investment constitutes a qualified project for purposes of the Alaska Stranded Gas Development Act; and providing for an effective date." CHAIR OGAN informed members that he had no intention of moving the bill that day, but wished to [adopt] a proposed committee substitute (CS), Version L [22-LS0322\L, Chenoweth, 3/28/01], as a work draft. Version L has language that would make it almost a companion bill to [SB 164]; however, it keeps the project language originally in HB 83, on page 2, lines 15 through 25, as well as the idea of designing enough capacity. CHAIR OGAN indicated his desire to have a short meeting on [Version L] and to have members familiarize themselves with its new language. He stated his intention of eventually developing HB 83 into the hub concept, but acknowledged it may take longer than the current session to do so. He announced the intention of having meetings over the interim, therefore, in order to move rapidly at the beginning of the next session, should that be the wish of the committee. Number 0380 CHAIR OGAN referred to a letter in committee packets [dated March 21, 2001] from Ken Thompson of Pacific Rim Leadership Development. He read from the attachment, which listed "Requirements for a Natural Gas Industry in Alaska." He noted that the first item, "Gas pipeline traversing Alaska," will probably be taken care of by the Senate bill. The second item needed discussion as to whether the state has at least a 12.5 percent share in the pipeline. The third item related to "in kind" use of gas [versus taking monthly royalty checks from producers selling the state's share]; he suggested in-kind gas could be on the Kenai Peninsula, for example, to keep the urea plants going there. The fourth item read: 4) State formulate clear policies and regulations for clarification of transparent netback pricing at the "hub" or "spur line points" as a valuation basis for gas sales within the State and netback pricing at the North Slope wellhead for clear and transparent royalty and taxation purposes. CHAIR OGAN commented that Mead Treadwell [who had testified on HCR 8 that day] had described that as moving the wellhead to wherever the hub is. Noting that Amerada Hess, in years past, had tracked every single drop of oil and every shipment in order to settle royalty disputes because the laws and policies were ambiguous, Chair Ogan emphasized the desire to avoid ambiguity and contentiousness with the producers by getting transparent royalty and taxation policies. CHAIR OGAN suggested perhaps the hub to Fairbanks is a good idea. He restated his intention of working on the hub policy, if it is the will of the committee. In response to a question, he said the following Friday there would be testimony and lengthy discussion about [Version L]. Number 0025 REPRESENTATIVE DYSON expressed hope that the administration's representatives would be present. CHAIR OGAN indicated his office would make that request. TAPE 01-22, SIDE A Number 0001 REPRESENTATIVE GUESS announced that she and Representative Joule would be in a House Special Committee on Education hearing on Friday and would, therefore, defer to the wisdom of the other members. REPRESENTATIVE DYSON commended the chair for choosing to work on this during the interim, and for being proactive, rather than just responding to what is going on in the marketplace in that industry. He offered to use some of his office account to assist Representative Joule in attending interim meetings, should there be no funding for the committee during the interim. CHAIR OGAN suggested the need to discuss with the leadership a bit of a budget to facilitate this. He said he would like to be that proactive facilitator. REPRESENTATIVE DYSON proposed that the committee should put together what they foresee as being in the best interests of the state, and then say to the industry, "If you can top this, go for it." He characterized the industry as the goose that lays the golden egg for the state. [HB 83 was held over.]