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Legislators air ASAP report questions Monthly meetings of gas caucus possible; Fairbanks, Cook Inlet, schedule concerns raised, along with how project fits with AGIA Kristen Nelson Petroleum News
The Joint In-State Gas Caucus had a chance to ask questions about the Alaska Stand Alone Pipeline Project July 25.
Two of the group’s four co-chairs, Sen. Lesil McGuire, R-Anchorage, and Rep. Mark Neuman, R-Big Lake, said the caucus would meet again before the start of the legislative session in January to give lawmakers the opportunity to explore the report, on providing in-state gas to Fairbanks and Southcentral, in more depth.
The report was initially presented to legislators by Alaska Gasline Development Corp. President Dan Fauske on July 5, and has since been presented to the Anchorage Chamber of Commerce, but as McGuire said, the July 25 meeting provided an opportunity for legislators to drill down into questions on the report.
Neuman suggested monthly meetings to get into more depth, and asked members to submit questions for future meetings so AGDC would be able to respond.
Fauske said he would be presenting the report to the Fairbanks Chamber of Commerce July 26, and McGuire requested a calendar of ASAP presentations so legislators could be present.
Fairbanks concerned Rep. Tammy Wilson, R-Fairbanks, focused one Fairbanks concern, asking what would happen to ASAP if there was a large natural gas discovery in Cook Inlet, enough to take care of Southcentral. Would there still be a line from Cook Inlet to Fairbanks, she asked.
Fauske said they’d even talked about reversing the flow of molecules in the event of a large find in Cook Inlet, and sending gas north to Fairbanks.
But, he said, no way will Fairbanks be left out.
Fauske said Fairbanks is a big part of making ASAP pencil out, and said he can’t envision a debate where Fairbanks is not part of the project. He said that in his role as CEO of Alaska Housing Finance Corp. he doesn’t believe Fairbanks can sustain itself at present energy costs and said lower-priced fuel, such as natural gas through ASAP, is a key part of a long-term economic strategy.
Sen. Charlie Huggins, R-Wasilla, one of the caucus co-chairs, said that in all of the conversations he’s heard in the gas caucus, there’s never been a course of action where Fairbanks would be left high and dry. There’s also a rural component to this he said; adding that the project is about all Alaska, not just the Railbelt.
Cook Inlet issues Sen. Fred Dyson, R-Eagle River, suggested that the group explore the impacts on people exploring for more gas in Cook Inlet and working on coal gasification and a high-voltage DC line from Prudhoe Bay: This project would put a damper on those working on other projects. He said he was concerned about the investment climate and said there are folks in Cook Inlet keeping an eye on things that could dampen demand for Cook Inlet gas.
McGuire said the Legislature passed Cook Inlet incentives as well as putting ASAP in place, and wanted to incentivize both Cook Inlet natural gas and ASAP, but agreed about the need to be careful about the signals that are sent to the marketplace.
AGIA issues Reps. Kurt Olson, R-Soldotna, and Craig Johnson, R-Anchorage, brought up AGIA, the North-Slope-to-market line licensed under the Alaska Gasline Inducement Act.
ASAP is limited to carrying 500 million cubic feet a day because of AGIA.
Olson asked for a debate on AGIA at the next meeting and Johnson asked how ASAP would be affected if AGIA didn’t result in a gas line.
Fauske said the state needs to move forward on in-state gas regardless of what AGIA does, and reminded legislators of the interest that was spurred in an in-state line when Anchorage Mayor Dan Sullivan started holding brown-out practices.
Johnson asked how it would change the scope of ASAP if the big line doesn’t happen.
Fauske said he expected to learn a lot through the ASAP open season, but said ASAP can be expanded, with added compression, to carry 1 billion cubic feet a day.
Sen. Joe Paskvan, D-Fairbanks, asked about the volume of natural gas liquids the line would carry and how that would affect the tariff. Mike Rocereta, AGDC’s commercial manager, said fewer NGLs in the line would raise the tariff, although there are other commercial levers that could be pulled.
Rocereta said decisions about NGL in the line will be made in the marketplace by producers and potential buyers.
Neuman asked about the new schedule, with first gas in 2018 instead of 2015: How solid is it, he asked.
Project Manager Dave Haugen said that the optimized schedule AGDC has proposed, with first gas in 2018, is realistic and follows generally accepted industry practice.
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