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Multiple gas line plans set to be heard House likely to hear multiple proposals, including port authority; Senate Resources also wants to hear from those who didn’t apply Kristen Nelson Petroleum News
The Alaska Legislature began work in Juneau Jan. 15 with a lot of familiar issues on the table — ethics, oil taxes and a gas line.
The focus on ethics will probably be on fine tuning the 2007 ethics legislation.
As far as oil taxes and a gas line go, legislators will be dealing with the results of actions they took last year.
Legislators — and the administration — are faced with how to handle the multi-billion-dollar surplus produced by high oil prices and the increase in oil production taxes due to ACES, Gov. Sarah Palin’s Alaska’s Clear and Equitable Share.
Legislators are also facing an evaluation — and eventually an up or down vote — if the administration approves and forwards to the Legislature the application it accepted under AGIA, the governor’s Alaska Gasline Inducement Act.
AGIA passed during last year’s regular session; ACES, a rewrite of the 2006 Petroleum Profits Tax passed under the administration of Gov. Frank Murkowski, passed late last year during a second special session.
This year’s session, the second for the 25th Legislature, is only 90 days, the result of a voter initiative shortening sessions by 30 days.
Saving, investment on table When the governor released the state budget in December, she proposed saving and investing $1.9 billion.
“One of the things we really want to do is save the surplus and we’ve concluded that CBR (Constitutional Budget Reserve) is probably one of the prime places” to put a “significant portion” of the surplus, Senate President Lyda Green, R-Wasilla, said Jan. 16. She said the other investment of interest to the 15-member Senate Bipartisan Working Group is investment in the state’s underfunded public employees’ and teachers’ retirement systems, generally referred to as “PERS” and “TRS.”
House Speaker John Harris, R-Valdez, said Jan. 15 he expects handling the increase in revenues to be one of a number of issues on the agenda. With high energy prices producing high energy costs for Alaska residents, Harris said he thinks investing in energy projects for the long-term benefit of the people of Alaska is one of the issues that will be debated, including projects like the Susitna Dam, hydro projects in the Juneau area and wind and solar.
Kevin Meyer, R-Anchorage, co-chair of the House Finance Committee, said the Anchorage economy is slowing down and he believes that is also true of the state economy. Some big jobs are starting to slow down, he said, and he’s worried “that in another year or two the jobs just aren’t going to be there.” The gas line won’t happen soon enough to pick up the loss in jobs, he said, “so I see the capital budget as being a way to create private-sector jobs.”
Beth Kerttula, D-Juneau, the House minority leader, called this year’s budget surplus both an opportunity and a responsibility. She said Jan. 15 that money should be put “into a true savings account so that we have money for the future.” That means, she said, putting money into the CBR, because money put into savings funds can be later “pulled out and used for differing things.”
AGIA coming There is a 60-day public comment period on TransCanada’s AGIA application under way; once that is complete, the administration will determine if the application is in the best interests of the state and if so, send the proposed license to the Legislature for approval. The Legislature does not, under AGIA, have the ability to change the license, only to approve or disapprove it.
Rep. Mike Doogan, D-Anchorage, who serves on the House Special Committee on Oil and Gas, said he’s heard estimates as late as the week before the end of the 90-day session for the administration to deliver a licensee under AGIA to the Legislature. He said the decision “is not shaping up — at least from my point of view — as an issue where we’re going to get out our rubber stamp and be able to make a decision to accept a licensee in a week or two weeks,” so an extension to the session or a special session would likely be required.
But Sen. Charlie Huggins, R-Rural Mat-Su-Chugiak, chair of Senate Resources, said he’d like to see the Senate complete all its work, including AGIA, in the 90-day timeline.
Huggins said he wants to hear from those who submitted applications — whether or not the administration found them complete — as well as from companies like BG and MidAmerican which were expected to submit AGIA applications but did not, and from ConocoPhillips which submitted a proposal to the administration, but not under AGIA.
We can learn from “the merits and demerits of those organizations that didn’t meet the criteria” and from their evaluations, Huggins said. He said he thinks it’s also important to understand the evaluations of those organizations that were expected to submit applications, but did not.
The Legislature’s priority is to move a gas pipeline forward, he said, “but not blindly. And if it meets the litmus test as the right thing to do, then that will happen. If not, then we have to look at what are alternatives, and what the answer is, because it’s an up or down vote.”
Kerttula said she thought it would “be helpful to us to understand what happened with the port authority’s proposal.” Does that mean the Legislature would not go by the AGIA process? “I don’t know right now. I mean I guess at the moment, we passed AGIA and we’re under that process.
“But we’ll see how it plays out.”
As much info as possible Harris said he believes Alaskans want as much information as they can get and the Legislature, which can only vote up or down on an AGIA licensee proposed by the administration, needs as much information as it can get.
He said he was concerned that only one proposal is moving forward under AGIA.
“We know that, under the law, the governor will determine what one or ones (of the applications) fit under the framework of AGIA. We’re very well aware of that, but we also know that anytime we pass a law in the state it isn’t perfect. We may have overlooked things; we may have inadvertently put things in that it turns out later shouldn’t be there.
“And I think it’s our right and our responsibility to again look at all the proposals, at least in a public hearing process,” he said.
Harris said he would encourage the House to do that and hoped to have a cooperative effort with the Senate, “to hear the all-Alaska gas line (Alaska Gasline Port Authority) proposal and any of the other ones that are out there, including ConocoPhillips’ proposal.”
Rep. Ralph Samuels, R-Anchorage, House majority leader and chair of the Legislative Budget and Audit Committee, said LB&A’s attorneys and consultants are looking at the ConocoPhillips proposal and “the issue of the $9 billion potential liability from the former partners (in the TransCanada-Foothills project) to try and get some partnership documents over the past many years.”
Samuels noted that he is not a fan of the AGIA process — he was the only member of the Legislature to vote against the bill — and said “I still stand by my vote on AGIA: I think we have some serious flaws.”
Gas the issue Both Samuels and Huggins mentioned getting gas for a TransCanada line as an issue.
Samuels noted that TransCanada has told both the U.S. Congress and the Alaska Legislature “that you have to enter some sort of deal with the shippers.”
TransCanada is “a very real company — they are not a fly-by-night outfit,” Samuels said, adding that he’s met with TransCanada executives over a number of years and “they’ve always been in my view pretty straight shooters.” He said he expects to get straight answers from the company, “whether or not we like to hear them or not,” but still thinks getting the gas under AGIA is the problematic part of the process.
Huggins described building the pipeline as a mechanical issue involving steel, a workforce and engineering. He said “the business of getting gas” into the line “may be the biggest challenge.”
On the issue of proposals not approved by the administration, Doogan said: “I’m not sure how either ConocoPhillips or the port authority gets back into consideration in that situation unless we’re going to go back and rewrite the AGIA law itself.” Doogan said there was no move that he has heard of to rewrite AGIA.
Harris said if the ConocoPhillips proposal gained traction in the Legislature, the Legislature could change the law.
Senate minority favors process Sen. Gene Therriault, R-North Pole, the Senate minority leader, said Jan. 17 that he thinks hearing about the ConocoPhillips proposal would be worthwhile because “whatever goes through the public comment period is going to be compared to ConocoPhillips’ proposal.”
On the suggestion that MidAmerican be invited, Therriault said they chose not to apply — “there may have been lots of other companies out there that chose not to apply.” He said he didn’t think there was time in a 90-day session to hear reasons why companies didn’t apply. “I think perhaps we’ve moved past that point,” he said.
He said he hopes the Legislature doesn’t get sidetracked. “I hope that we’re not sensing … a movement amongst those in the building to somehow jettison or sidetrack the AGIA process.”
Therriault noted that AGIA was passed by this Legislature, “not some previous Legislature that we grumble about, but the people that are sitting in the chairs in this building today.”
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