Legislature(2003 - 2004)

03/15/2004 01:07 PM House RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 417-AK NATURAL GAS DEV. AUTHORITY INITIATIVE                                                                               
CO-CHAIR MASEK  announced that the  next order of  business would                                                               
be  HOUSE  BILL NO.  417,  "An  Act  amending the  definition  of                                                               
'project'  in  the  Act  establishing   the  Alaska  Natural  Gas                                                               
Development Authority; and providing for an effective date."                                                                    
Number 0960                                                                                                                     
REPRESENTATIVE MIKE CHENAULT,  Alaska State Legislature, sponsor,                                                               
explained  that HB  417  amends the  definition  of "project"  to                                                               
include  all options  for a  terminus of  the Alaska  natural gas                                                               
pipeline.     This  specifically  identifies  Cook   Inlet  as  a                                                               
possibility for a terminus.                                                                                                     
Number 0993                                                                                                                     
REPRESENTATIVE   CHENAULT,   in    response   to   Representative                                                               
Guttenberg,  said   this  would  give  the   Alaska  Natural  Gas                                                               
Development Authority  (ANGDA) the  ability to  look at  the Cook                                                               
Inlet basin as  a possible terminus, rather than  only looking at                                                               
Prince William Sound as a possible terminus.                                                                                    
Number 1049                                                                                                                     
HAROLD  HEINZE,  Chief  Executive  Officer,  Alaska  Natural  Gas                                                               
Development Authority,  explained that  Ballot Measure  3, passed                                                               
in 2002, defines  what a "project" is.   It specifically includes                                                               
not only  a [main  natural gas  pipeline] to  Valdez, but  also a                                                               
spur line  from Glennallen to  the Cook  Inlet area.   Mr. Heinze                                                               
noted that  he'd provided information  to demonstrate  that ANGDA                                                               
has been looking at Cook  Inlet and has considered delivering gas                                                               
into the Cook Inlet area, which  is one of ANGDA's most important                                                               
responsibilities and  benefits offered  to Alaska.   He  said his                                                               
understanding  of the  bill is  that it  would instruct  ANGDA in                                                               
looking at  its development-plan  work targeted  for June  15, to                                                               
expand its  [options] for  a terminus  to specifically  include a                                                               
pipeline directly to a Cook Inlet port.                                                                                         
MR. HEINZE  said the  level of  detail it  takes to  address that                                                               
kind  of a  routing between  now and  June 15  is going  to be  a                                                               
little tricky.   He  said ANGDA  has mainly  been using  the work                                                               
that  relates to  the Yukon  Pacific  [Corporation]] effort  that                                                               
went  down  the  Trans-Alaska  Pipeline.     In  looking  at  the                                                               
feasibility of the project, he  said, he isn't uncomfortable with                                                               
looking  at Cook  Inlet  in a  feasibility sense.    He said  the                                                               
engineering  technical  data,  in particular,  the  environmental                                                               
permitting issues related  to that, would be  difficult for ANGDA                                                               
to assess in the short amount of time available.                                                                                
Number 1197                                                                                                                     
STEVEN PORTER, Deputy Commissioner,  Department of Revenue (DOR),                                                               
explained that  DOR and  the state  have looked  at ANGDA  as the                                                               
entity to look at all of the  in-state gas use, and is looking at                                                               
bringing gas to Cook Inlet  and other areas throughout the state.                                                               
He said DOR doesn't consider  this legislation to be inconsistent                                                               
with  that.    Mr.  Porter mentioned  the  broader  economics  of                                                               
bringing gas to Cook Inlet  versus Valdez, barring the permitting                                                               
and the  environmental issues.   He said  the basic  economics of                                                               
those two areas  are so similar that research on  one area fairly                                                               
well  much applies  to the  other area  in terms  of the  overall                                                               
economics  of  an  LNG  [liquefied natural  gas]  project.    The                                                               
permitting and environmental work  on each element, including the                                                               
spur  line  from  Glennallen to  Anchorage,  would  require  some                                                               
additional work  on behalf of  the authority to solve  and answer                                                               
those problems.                                                                                                                 
Number 1277                                                                                                                     
REPRESENTATIVE KERTTULA asked how much  of an extra workload this                                                               
could result  in, and if that  was being taken into  account with                                                               
respect to ANGDA's budget.                                                                                                      
MR. HEINZE explained  that based on what had been  looked at thus                                                               
far,  regardless  of  a  route,   there  hasn't  been  a  lot  of                                                               
difference  in the  numbers  relating  to where  and  how gas  is                                                               
brought to  tidewater in Alaska.   He said in terms  of the early                                                               
feasibility  phase [ANGDA]  is  currently in,  it  isn't seen  as                                                               
necessary  to  differentiate,  fairly  exactly,  those  different                                                               
options at  this point;  to do  that would  require little  to no                                                               
additional work,  but a  more definitive  choice between  the two                                                               
areas would require considerable work  and time.  He indicated no                                                               
additional effort  or funding is  required in looking at  the two                                                               
locations indeterminately,  but said  to make the  choice between                                                               
the two locations would require  considerably more effort than is                                                               
included in ANGDA's funding.                                                                                                    
Number 1388                                                                                                                     
REPRESENTATIVE  STEPOVICH asked  why Cook  Inlet wasn't  included                                                               
MR. HEINZE said he  had nothing to do with Ballot  Measure 3.  He                                                               
explained that  the project's sponsors  had chosen what  was felt                                                               
to  be the  most executable  project at  the time.   He  said the                                                               
value of  the permitting already done  on the route to  Valdez is                                                               
extremely significant with  regard to the [June  15 deadline] and                                                               
all  of  the  other  issues.   However,  [ANGDA]  is  aware  that                                                               
ConocoPhillips Alaska, Inc., and  BP, in conjunction with several                                                               
others,  have  looked at  a  more  direct  route to  Cook  Inlet.                                                               
Saying [ANGDA]  has never seen the  work and has no  knowledge of                                                               
it, he indicated  he'd feel much better about  moving quickly and                                                               
about what the problems are if he could see the work.                                                                           
Number 1502                                                                                                                     
REPRESENTATIVE  GUTTENBERG  asked  if  there was  any  reason  to                                                               
exclude other possibilities for other routes.                                                                                   
MR. PORTER  said the governor  has stated interest in  looking at                                                               
all  the different  options for  economic  marketability for  the                                                               
gas,  so there  isn't a  reason to  exclude any  option that  may                                                               
become an economically viable project.                                                                                          
Number 1551                                                                                                                     
CO-CHAIR DAHLSTROM moved  to report HB 417 out  of committee with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
There  being no  objection, HB  417 was  reported from  the House                                                               
Resources Standing Committee.                                                                                                   

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