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RCA comments on proposed AGDC bill Sponsors present bill to Regulatory Commission of Alaska, asking for comments; and to Legislature’s Joint In-State Gas Caucus Kristen Nelson Petroleum News
Legislation authorizing an expansion of authorities for the Alaska Gasline Development Corp., the state agency charged with developing an in-state natural gas pipeline project, is moving in the House and the sponsors had opportunities March 14 and 15 to discuss the bill and get comments.
The Joint In-State Gas Caucus got an update March 14 and the Regulatory Commission of Alaska heard an overview and responded to requests for comments on House Bill 4 in a March 15 special hearing.
The bill, which is now in House Finance with a first hearing scheduled March 21 as this issue of Petroleum News goes to press, establishes the Alaska Gasline Development Corp., AGDC, as a separate state entity. AGDC was authorized by HB 369 in 2010 as a subsidiary of the Alaska Housing Finance Corp.
HB 4 also provides a number of what co-sponsors House Speaker Mike Chenault, R-Nikiski, and Rep. Mike Hawker, R-Anchorage, characterize as tools necessary to move the project forward, the project being to move natural gas off the North Slope for use by Alaskans.
RCA questions 30-day approval Hawker, in introductory comments to RCA by phone at the March 15 hearing, said the bill’s sponsors chose not to “invade” 42.05 or 42.06, the Alaska Public Utilities Regulatory Act and the Pipeline Act, but instead to establish a new chapter of statute, 42.08, for contract carrier natural gas pipelines in the state.
The fundamental premise of that section, he said, was to respect the rights of contract between two unlinked parties of equal standing while providing a strong regulatory basis for consumer and state protection, providing a framework that wasn’t overly prescriptive, and that would require “minimal oversight” from the state.
Hawker said the objective was “responsible consumer oversight” without creating “an unnecessary and excessive” regulatory burden on contract carrier pipelines, since by definition contract carriage is based on a contract between two parties at arm’s length and of equal standing.
Rena Delbridge, staff to Hawker, gave the commission an overview of HB 4 as it applies to RCA, and responded to commission questions.
Commissioners had questions on a number of aspects of the bill, from the reasonableness of a requirement that an initial recourse rate be approved within 30 days — Delbridge said that was the type of information the sponsors were seeking — to whether the bill is applicable to gas pipelines generally — Hawker said that it is.
Fiscal questions from legislators Members of the Joint In-State Gas Caucus heard from co-sponsors Hawker and Chenault, and from Dan Fauske and Frank Richards of AGDC.
Richards, AGDC manager of pipeline engineering and government affairs, reviewed recent changes in the project from a high-pressure 24-inch line to a low-pressure 36-inch line, and said that because AGDC has a final environmental impact statement from the Corps of Engineers for the 24-inch high-pressure line, some additional work with the Corps would be necessary.
Fauske, CEO and executive director of AHFC and president of AGDC, noted that a supplemental to an EIS is “far less onerous” than starting over, and said that going to a larger, lower-pressure line allowed removal of the expensive straddle plant needed to serve Fairbanks under the high-pressure option. The low-pressure option, he said, also opens up access to all communities along the line at a nominal fee to tap into the line.
And elimination of the $250 million straddle plant also makes proposed tariffs to Fairbanks lower than to Anchorage. Fauske said it had been a sore point in Fairbanks that under the initial plan even the proposed Fairbanks tariff was higher than Anchorage, although Fairbanks is farther north.
Current work Richards said current field work includes drilling at the Yukon River to determine the feasibility of horizontal directional drilling for a crossing there as opposed to a bridge.
There is a bridge, Fauske said, owned by the state, but the hangers for pipelines are owned by Alyeska Pipeline Service Co. and because the trans-Alaska oil pipeline is a strategic facility, the Transportation Security Administration is involved. There are concerns, Fauske said, about whether they will let you hand a gas line next to an oil line, and the cost of a new bridge to get across the Yukon would be some $50 million.
Legislators had questions about the $400 million in state money needed for the project, whether contract carriage could require Alaskans along the line to pay an export gas price and what usage estimates for Fairbanks were included in modeling for the tariff.
The $400 million, Fauske said, is the money the state is investing to advance the project and fine tune it. Once a successful open season has been held, he said, bonds would be sold for construction financing, and from that point on it would be expenditures of investors, not the state.
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