SB 215-GASLINE DEV. CORP: IN-STATE GAS PIPELINE  3:40:13 PM CO-CHAIR PASKVAN announced SB 215 to be up for consideration [version 27-LS1392\M was before the committee]. 3:40:27 PM SENATOR JOE THOMAS, Alaska State Legislature, sponsor of SB 215, said they had studied these routes for a long time, particularly the one between the Interior and the existing infrastructure north of Cook Inlet. When he was first elected, he drove the route from Prudhoe Bay into Fairbanks; the Alaska Stand Alone Pipeline (ASAP) and the Alaska Natural Gas Development Authority (ANGDA) had also studied that route, and they all identified the southern route using the Parks Highway as the most preferred route to move gas into the Interior. It could serve as a spur for the AGIA line, as well. SENATOR THOMAS said that wells are now being drilled in Cook Inlet that could have as much as 19 tcf of gas, and any market for Cook Inlet gas would increase the economics for that particular route. It is the shortest route from existing infrastructure to the Interior of Alaska and could connect up with a line from the North Slope in the future. The overall price tag of a smaller line is smaller and they will know by fall how much gas is in Cook Inlet. He said as the ASAP pipeline moves forward, it seems reasonable to build the southern section first, as that portion would be used regardless of the AGIA line or another other line that goes into use. SENATOR THOMAS said SB 215 does not stop the in-state line; it's just the first half of it; it could easily be extended onto the North Slope at any time. The southern portion will also increase the opportunity for Interior gas exploration and development of the Interior basins that have been known and explored to some degree for decades. This route would also reduce costs of other natural resource development in the Southcentral, Upper Kuskokwim and Interior regions of the state. He said that people always talk about public/private partnership and there is probably an opportunity to extend this line off towards the Donlin Creek Mine that has been talking about building its own line. It goes through some very realistic mining area to the west of the Susitna River. SENATOR THOMAS said it is past the time to continue studying pipelines and roads to enhance development of Alaska's resources and build something. This pipeline from the North Slope has been studied since 1959. SB 215 is part of a long-term affordable energy solution for Interior Alaska and benefits other areas that could use natural gas in the future. He added that realistically, the southern end of the pipeline should have a dramatic reduction in the cost per mile as the materials, pipe, all the equipment, gravel and supplies would be delivered by rail and/or paved road, a much different cost per mile compared to the northern line. 3:46:04 PM CO-CHAIR WAGONER said he might add one other thing to his presentation: if this pipeline is built it enhances the ability to export gas if it is found in the Interior in such places like the Nenana Basin. The pipeline runs both ways. SENATOR WIELECHOWSKI, co-sponsor of SB 215, said he thought this was a great bill. This bill helps Fairbanks, because having a pipe to put gas in will increase exploration. He asked what size he anticipated the line would be. SENATOR THOMAS replied either 20 inches or 24 inches based on ANGDA and ASAP studies and what Enstar has said. SENATOR WIELECHOWSKI asked if that would carry 500 mmcf. SENATOR THOMAS answered yes. SENATOR STEVENS asked for an idea of the distance of the southern portion and how much it would cost compared to the northern portion. SENATOR THOMAS replied that the line would be about 350 to 365 miles long. The AGIA spur to Anchorage would be 365 miles, but just getting to Fairbanks with existing infrastructure is about 335 miles. The figures at this point in time are not necessarily refined and are more of an average cost per mile based on the entire 720 miles of the pipeline from Prudhoe Bay to Mile 39 by Wasilla. About $1.3 billion to $2 billion of the costs on the northern end are for compressor stations and a conditioning plant, but those numbers could be refined more into the $1.25 billion range. CO-CHAIR WAGONER said Cook Inlet gas is really good and doesn't need a conditioning plant. That is a huge savings versus North Slope gas to Fairbanks. CO-CHAIR PASKVAN remarked that a straddle plant wouldn't be needed either. 3:51:56 PM GRIER HOPKINS, staff to Senator Joe Thomas, Alaska State Legislature, said the 1.84 billion gas treatment facility on the North Slope could be taken off the books, too, and the pipeline from the North Slope to Dunbar - at least until a later date if a pipeline gets built the rest of the way up. The Fairbanks straddle plant was estimated to cost $280 million - and all those costs would not have to come into play right now, especially the gas treatment plant and the straddle facility. Regarding Senator French's question, Mr. Hopkins said the Alaska Gasline Development Corporation (AGDC) recently published a preliminary distribution report for the Fairbanks area and it came in at about 60 mmcf/day for a total of 20 bcf/year, and that could be supplied by a 12 inch line. But if the second half of the line is built from the North Slope, it would make sense to build a 20 inch line. He explained that the 60 mmcf represents a 25 percent increase for the Cook Inlet market. All the gas would not be available for use immediately; it would take about 10 years to get the project completed. 3:54:11 PM MR. HOPKINS said even if gas is delivered at today's cost ($23 mmcf), Fairbanks would save $114 million/year. Bringing a sizeable amount of gas to Fairbanks would also help air quality. CO-CHAIR PASKVAN said this committee should keep in mind that the construction of pipeline coming from the Kenai going to Southcentral heading north from Big Lake to Interior Alaska would create an energy distribution system with storage in place. A significant portion of the Alaska's population would be on this energy distribution system. And he felt that there should be an export of natural gas to Alaskans in the Interior before Alaska's resources are sent overseas. CO-CHAIR PASKVAN said public testimony would be officially opened at a later date, but Mr. Green had come down from Fairbanks to testify. 3:58:15 PM RICHARD GREEN, representing himself, Fairbanks, AK, said he just paid his fuel bill and thought it was a good time to testify since he was already in Juneau. People in Fairbanks appreciated the due diligence they are doing in Juneau, but Fairbanks needs some energy relief, he said. He manages a large lumber yard there and the utility bills "would knock your socks off." Personally, he has a five-star plus energy house and his energy bills are high there, too. It's time to do something. CO-CHAIR WAGONER asked what his five-star house is costing to heat. MR. GREEN answered that his 3,000 sq. ft. house uses 5.3 gallons of fuel a day or about 2,000 gallons a year at $4 or $5 a gallon. CO-CHAIR PASKVAN said to purchase 1,000 gallons of fuel at $4 a gallon would cost $4,000. To get the comparable btus with natural gas under current Southcentral pricing would be a little under $1,400. 4:01:58 PM JIM SACKETT, CEO/President, Toghotthele Corporation, Nenana, AK, supported SB 215. A mechanism is needed to move energy to or from Interior Alaska and that is what SB 215 does. They all know what the reasons are. CO-CHAIR PASKVAN thanked Mr. Sackett and said official public testimony would happen very soon. [SB 215 was held in committee.]