ALASKA STATE LEGISLATURE  HOUSE SPECIAL COMMITTEE ON ENERGY  March 2, 2023 10:15 a.m. DRAFT MEMBERS PRESENT Representative George Rauscher, Chair Representative Tom McKay Representative Stanley Wright Representative Mike Prax Representative Calvin Schrage Representative Ashley Carrick MEMBERS ABSENT  Representative Josiah Patkotak COMMITTEE CALENDAR  HOUSE BILL NO. 74 "An Act relating to geothermal resources; relating to the definition of 'geothermal resources'; and providing for an effective date." - HEARD & HELD PRESENTATION: GREEN HYDROGEN AND ALASKAN GEOTHERMAL - HEARD PREVIOUS COMMITTEE ACTION  BILL: HB 74 SHORT TITLE: GEOTHERMAL RESOURCES SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR 02/15/23 (H) READ THE FIRST TIME - REFERRALS 02/15/23 (H) ENE, RES 02/23/23 (H) ENE AT 10:15 AM BARNES 124 02/23/23 (H) -- MEETING CANCELED -- 02/28/23 (H) ENE AT 10:15 AM BARNES 124 02/28/23 (H) Heard & Held 02/28/23 (H) MINUTE(ENE) 03/02/23 (H) ENE AT 10:15 AM BARNES 124 WITNESS REGISTER PAUL CRAIG, President GeoAlaska, LLC Anchorage, Alaska POSITION STATEMENT: Gave invited testimony during the hearing on HB 74. GUY OLIVER, PhD, Geoscience and Exploration Leader Ignis Energy Houston, Texas POSITION STATEMENT: Gave invited testimony during the hearing on HB 74. GEOFF SIMPSON, Landman Cyrq Energy Boulder, Colorado POSITION STATEMENT: Gave invited testimony during the hearing on HB 74. PAUL FUHS, CEO, Alaska Hydrogen Industries Juneau, Alaska POSITION STATEMENT: Testified in support of HB 74; gave the "Green Hydrogen and Alaskan Geothermal" presentation. ACTION NARRATIVE 10:15:21 AM CHAIR GEORGE RAUSCHER called the House Special Committee on Energy meeting to order at 10:15 a.m. Representatives Carrick, Prax, McKay, and Rauscher were present at the call to order. Representatives Wright and Schrage arrived as the meeting was in progress. HB 74-GEOTHERMAL RESOURCES  10:16:35 AM CHAIR RAUSCHER announced that the first order of business would be HOUSE BILL NO. 74, "An Act relating to geothermal resources; relating to the definition of 'geothermal resources'; and providing for an effective date." 10:17:33 AM PAUL CRAIG, President, GeoAlaska, LLC, stated that GeoAlaska has two Geothermal exploration permits, on Mt. Spurr and Augustine Island. He said that GeoAlaska and Ignis Energy have worked out an agreement to partner together in efforts to develop geothermal energy at those sites. GeoAlaska fully supports HB 74 and views it as a necessary step in the development of geothermal resources, as the current length of time for permits under current statute is too short to discover the feasibility of a geothermal plant in a given area. He said that the current instability of royalty structures also makes it more difficult to secure investors. He stated that the oldest geothermal project in the world was created in 1904 in Tuscany, Italy, and it is still producing geothermal energy today. 10:26:40 AM GUY OLIVER, PhD, Geoscience and Exploration Leader, Ignis Energy, stated that Ignis Energy supports HB 74 as written. Ignis Energy is a worldwide leader in connecting different sources of energy with geothermal sources of energy in order to meet energy demand. He said that Ignis has been doing work in the state of Alaska for over 20 years. Its aim in Alaska is to greatly increase the development of Alaska's "underutilized" geothermal resource potential. He said that the extra time to explore provided in HB 74 is a vital step in increasing geothermal power, especially because of Alaska's weather patterns limiting the amount of work that can be done during certain parts of the year. 10:33:11 AM REPRESENTATIVE PRAX asked when the projects at Mt. Spurr and Augustine Island could be expected to start producing energy. DR. OLIVER answered that if according to plan, geophysical data is expected this year, a test well is expected by summer 2024, and the total time it is expected to take to start producing energy is 5 or 6 years from now. 10:36:14 AM GEOFF SIMPSON, Landman, Cyrq Energy, stated that Cyrg Energy is a subsidiary of Macquarie Infrastructure and Real Assets, the largest infrastructure company in the world. Cyrg has 10 ongoing geothermal projects around the world, including Alaska, and fully supports HB 74. 10:38:37 AM CHAIR RAUSCHER opened public testimony on HB 74. 10:39:09 AM PAUL FUHS, CEO, Alaska Hydrogen Industries, testified in support of HB 74. He stated that geothermal energy is sustainable long- term, and the provisions in the bill changing the royalty structure would create stability for geothermal energy. 10:40:32 AM CHAIR RAUSCHER closed public testimony on HB 74 after ascertaining nobody else wished to testify. [HB 74 was held over.] 10:40:45 AM The committee took an at-ease from 10:40 a.m. to 10:42 a.m. ^PRESENTATION: GREEN HYDROGEN AND ALASKAN GEOTHERMAL PRESENTATION: GREEN HYDROGEN AND ALASKAN GEOTHERMAL    10:42:10 AM CHAIR RAUSCHER announced that the final order of business would be a presentation titled: "Green Hydrogen and Alaskan Geothermal." 10:42:31 AM PAUL FUHS, CEO, Alaska Hydrogen Industries, gave a PowerPoint presentation titled, "Alaska Geothermal, Green Hydrogen, and Associated Industrial Processes and Products" [hard copy included in the committee packet] during the Green Hydrogen and Alaskan Geothermal presentation. He stated that he oversaw the building of a geothermal well during his time as mayor of Dutch Harbor, Alaska. He drew attention to the slide and stated that earth's core is the same temperature as the sun, and that heat radiates through the mantle and allows for the ability to produce geothermal energy. 10:44:20 AM MR. FUHS continued to slides 3 and 4 and gave an overview of possible geothermal sites in the Aleutian Islands and Alaska's strategic marine shipping position. He provided a map with the locations and showing the heat flow. He stated that that position allows for materials and goods to flow easily through the islands, increasing geothermal opportunities. MR. FUHS continued to slides 5 and 6 and stated that the geothermal production system is binary. Heat is exchanged to produce steam and spin the turbines, which creates electricity, and the water is then reinjected into the ground to be heated again. He showed the Mammoth Geothermal Plant in California, which has an energy output similar to that of Bradley Lake Hydroelectric in Alaska. 10:47:03 AM MR. FUHS continued to slides 7 and 8 and showed images of a magnetoelluric geothermal imaging graph and a hydrolyzer plant in Denmark. He stated that the most expensive part of geothermal production is the exploration for a good location. The green areas on the image are the less resistant areas, which allow the necessary process of water going back into the ground. He stated that a hydrolyzer plant separates the water from the hydrogen in the process of restoring the water into the plant production area. 10:49:20 MR. FUHS continued to slides 9 and 10 showing the False Pass Geothermal and Tidal Site and the Makushin Geothermal Plant in Dutch Harbor. He stated that the hydrogen producing parts of the plant could be adjusted to fill whatever current energy ends there are in False Pass. The Makushin Geothermal Plant is able to produce energy at a cost as low as 4.5 cents per kilowatt- hour, and the currents sales agreement with Dutch Harbor is 12 cents per kilowatt-hour. He stated that there have been some challenges to the project involving changing regulations, and the continuation of geothermal development relies on the state providing stability where possible. 10:54:23 AM REPRESENTATIVE PRAX asked whether Alaska Hydrogen Industries is working with the Alaska Energy Authority. MR. FUHS answered that it is. 10:55:14 AM MR. FUHS continued to slides 11 through 13 and showed more images of geothermal plants and geothermal imaging. He stated that Unimak Island includes an area of state land that has the potential to house facilities for both geothermal and tidal production, and Adak Island has great geothermal energy potential. He added that Adak, Alaska, also has infrastructure that would make getting started there easier. He showed an additional sample of geothermal imaging representing the type of area that would best support the production of geothermal energy 10:57:22 AM MR. FUHS continued to slide 14 and gave a brief overview of hydrogen programs provided by the U.S. Department of Energy (DoE). He stated that due to population size, DoE had previously rejected a grant in Alaska, but Alaska Hydrogen is working on a proof of concept in an attempt to garner interest for future projects. MR. FUHS continued to slides 15 through 17 and gave an overview of hydrogen electrolysis. He stated that separating the hydrogen and oxygen anodes works to generate electricity. He compared hydrogen electrolysis with burning natural gas, showing the difference in carbon dioxide that is placed into the atmosphere. 10:59:54 AM REPRESENTATIVE MCKAY asked what the temperature would be in Fahrenheit. MR. FUHS answered that the temperatures cross over at some point. 11:00:40 AM MR. FUHS continued to slides 18 and 19 and stated that steel is one of the greatest sources of carbon dioxide due to the high amount of burning involved in the process. He said that Kobe Steel has built a plant in South Carolina that has a tower that exposes the iron to the hydrogen without burning it. He added that steel is the most recycled material, and that this process has the potential to increase the number of times it can be recycled. 11:03:17 AM MR. FUHS continued to slides 20 and 21 and gave a brief overview of hydrogen based fuels. He stated that ammonia works well as a fuel and can be stored at temperatures that other types of fuel cannot. Methylcyclohexane is an artificial chemical created by taking hydrogen from the air, so although carbon is being put into the air, it was taken out to produce the fuel. He added that it is already used to raise the octane level of gas station fuel. MR. FUHS continued to slides 22 through 25 and gave an overview of fuel density and transportation. He stated that using less dense fuels would allow ships to carry more cargo and make fewer stops. He showed an experimental ship design that would allow for the more efficient transport of liquid hydrogen. 11:07:32 AM MR. FUHS continued to slides 26 and 27 and stated that there is a market for hydrogen based products in Japan. Japan is seeking to reduce their fossil fuel output and look for nuclear alternatives. He stated that the State of Alaska could help by implementing policies that would support the development of renewable fuels, including providing financial support for the upfront costs associated with geothermal energy production. He added that the state should continue to provide support for fossil fuel production and gave his opinion that people living in Artic regions are being made to "pay" for fossil fuel usage around the world. He said that Alaska would also need to support the development of mineral resource development, as those minerals are needed to build the equipment needed for renewable energy production. 11:11:09 AM CHAIR RAUSCHER asked how the purification process for iron ore works. MR. FUHS answered that large magnets are used to pull the iron out, and the iron would be sent to hydrogen based steel plants. 11:12:41 AM REPRESENTATIVE MCKAY asked if there are any significant sources of iron ore in the state of Alaska, or if it comes from other places. MR. FUHS answered that two of the biggest sources of iron ore are Brazil and Canada. In response to a follow-up question, he said that any coal of the quality necessary to produce steel is on the North Slope. 11:15:45 CHAIR RAUSCHER announced that HB 74 was held over. 11:16:15 AM ADJOURNMENT  There being no further business before the committee, the House Special Committee on Energy meeting was adjourned at [11:16] a.m.