Lawmakers study AGIA's impact on in-state gas pipeline
Published Thursday, June 26, 2008
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Stumble It!JUNEAU — A legislative hearing Wednesday on legal issues relating to TransCanada’s gas pipeline proposal drifted into a debate on what the Alaska Gasline Inducement Act would mean for an in-state gas pipeline.
The hearing, which took place in Anchorage, was hosted by the Senate Judiciary Committee and focused on what the state could and couldn’t do for an in-state pipeline if it issued an exclusive license to TransCanada under AGIA.
AGIA blocks the state from supporting a “competing” pipeline after issuing a license to another entity, but lawmakers have questioned what qualifies as support and what defines a competing pipeline.
Don Bullock, a lawyer with the Legislature’s legal services division, testified Wednesday that state support would include direct financial assistance or any royalty or tax treatment that favored the competing project over the licensed one. He added that AGIA would not stop the state from changing its tax code in a way that affected all projects equally.
The definition under AGIA of a competing project — one that carries more than 500 million cubic feet of gas per day — would likely apply to the pipeline as originally built, Bullock said, meaning that the state could still support a 500 million cubic foot pipeline that was capable of being expanded later.
Bullock added that if the state did support a competing project, it would owe TransCanada three times what the company had invested in its project to date, but most likely would not have to repay the company for costs the state reimbursed through its matching contribution.
In general, Bullock reaffirmed the legal interpretations given by Gov. Sarah Palin’s gas line team.
Bullock and Revenue Commissioner Pat Galvin, who also testified at the hearing, both described the provisions as part of a commitment to the licensee — “I’m marrying you, and I’m not going to give some of the benefits to the mistress,” Bullock said — but not a commitment that tied the state’s hands.
The provisions don’t prohibit the state from ever helping another project, they said. Instead, they spell out the penalties for doing so.
Despite the agreement on legal issues, some lawmakers still expressed strong concerns about the provisions themselves.
Rep. Jay Ramras, a Fairbanks Republican and chair of the House Judiciary Committee, questioned the restriction and said as a businessman, he likes to have all options available. He noted that if an in-state pipeline needed to carry 600 million cubic feet to make it economic, AGIA would block the state from supporting it.
Galvin and Antony Scott, an analyst with the state’s Division of Oil and Gas, argued that 500 million cubic feet would be more than enough to meet all in-state gas needs for heating and electricity and provide for industrial uses for decades.
If a project that size wasn’t economic, it would make more sense for the state to subsidize it than to risk losing TransCanada’s much bigger project by supporting a larger in-state project, Galvin said.
Galvin added that the number was chosen to meet in-state needs while ensuring that enough gas would be available for the larger project.
The hearing raised a pair of other issues related to the gas line.
The first involved the state’s oil and gas production tax. Bullock, the legislative lawyer, said he thought a recent change lowering the tax rate for gas sold in Alaska would probably be struck down as a violation of the interstate commerce clause of the U.S. Constitution. (Galvin said later the administration was aware of the risk.)
The second involved the permitting privileges TransCanada would get under AGIA. Bullock said he thought if TransCanada and other project sponsors, such as BP and ConocoPhillips, who are pursuing their own project outside AGIA, applied for state permits at the same time, TransCanada’s application would be considered first.
Galvin replied that existing permitting procedures would allow the producers to pay for the same assistance in permitting that TransCanada is given through AGIA.
Lawmakers are scheduled to continue their review of the TransCanada proposal today in Kenai.
Community Discussion
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So let me get this right. Alaska voters vote to build an All Alaska Gasline. Pat Galvin and other within the administration then scheme to write legal language in AGIA that makes critical state support for the voter approved project virtually impossible?
Are you kidding us?
If that isn't bad enough, Fairbanks is then told that we might get gas around 2020.
It seems very obvious that the more we learn about the TransCanada scheme the less sense it makes.
Why not do what Alaska voters instructed six years ago?
Expect some major political fallout because of the misrepresentations made by the administration.
Seems by what I've heard from the audio they have no idea what's to do looks like there worried to get it to Fairbanks then anywhere else but they are also saying they already have a gasline that goes to some place s (but I've also heard it's one of the most expensive around.) Just listening to them they sound like they keep going back to the same points over and over again.
Did you ever see a lawyer try to get a gallon of milk out of a cow?
http://www.humoronline.com/weird-news-pi...
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http://www.aslowerpace.com/serendipity/i...
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AGIA needs to consider the definition of "gas"..
Alaska has a big surplus of methane..
..but should keep the ethane,propane,butane,pentanes,and helium for Alaskans to use.
In 2001, then-premier Ralph Klein said his government would seize liquids from Alaskan gas that passes through the province on its way to the United States as Alberta's "pound of flesh."
MethaneHydrate is not a gas..
..it's a dessert called Baked Alaska.
Methane over 1500psi is not a gas, it's a liquid..
..looks to me like TC gets a CNG line to wash their tar-sands with.
========
TC isn't in a big hurry to make a move on AK-gas, they have plenty of their own gas, and the stupor-majors are grazing grass on both sides of the fence too....
http://www.reuters.com/article/GlobalEne...
So, if Alaska wants to make money off it's own gas Alaska should pull it's head out of it's backside and build an AllAlaska plastics industry using it's own gas.
First Gasline to Fairbanks Wins!!!
www.fairbanksgas.com
......splash/bubble
Can someone please tell me what the cost of suppling gas to every home in the North Star Borough. If you say cheap gas, prove it with the figures that gas will be cheap ten years from now. This is going to be a lot of time lost telling people we can get gas to your home, when we should be developing other alternatives that are realistic.
As far as industry goes, if it ever happens Anchorage will build it. We lack the one cheap transportation mode, the ocean and barges. Why should industry add on additional transportation cost , when they can still build in Alaska, but the town will be Anchorage. Before any more talk about cheap gas, show me the proof in writing that someone has agreed to build and deliver cheap gas to every home in the North Star Borough.
I don't see supplying cheap gas to every home in the FNSB as even feasible? We all install new holding tanks? We all change out or convert our boilers? They can't pipe it into all the houses like in Anchorage or on a military base due to the rural nature of our community. Where are the companies with the massive fleets of trucks that can deliver the gas if everyone did have gas fired boilers and storage tanks? Isn't natural gas fairly volatile in the case of an accident? I mean more so than diesel? So when the delivery trucks get in vehicle accidents they explode wiping out multiple city blocks? These seem like legitimate concerns that I've not head anyone addressing. Has anyone given a number as to the cost of the conversion for the average home in the FNSB. Everyone screams get gas now, I'd just like to know exactly what they expect to do with it?
Can someone please tell me what the cost of suppling gas to every home in the North Star Borough.
Woodman you make a great point. Without any distribution system the outer points in the borough wont see any cheap gas. This is yet another reason that the state should be spending the big bucks on hydro, and where applicable, wind and tide current to produce electricity cheaply enough for our own usage. The distribution system is all ready there! Sell the gas to the less fortunate down south who will always be at the mercy of the world market price which will keep swinging wildly as the earth becomes more populated and more countries go from third world to modern status. Electricity produced here without a fossil fuel source, gravity or wind, will not be a part of global price swings because it can't be stored, trucked, loaded on a ship or sent down a pipe to elsewhere. It can't be speculated upon by a bunch of investors trying to get rich off the system.
ANGDA already knows propane is the future for rural energy in many parts of rural AK that don't have groovy power like geothermal, it's cheap to transport, store, and can be supplied by plastic gaslines easily.
NS-gas is 6% propane..
..and there's propane in YukonFlats & NenanaFlats too.
Propane will be cheaper than GVEA because there will be more competition in the supply chain. LPG can be piped through little HDPE-gaslines through Atigun and Anaktuvuk cheap and quick. CNG-methane can be passed through plastic gaslines too.
Ok D.T., you have solved the distribution conundrum. Now solve this: Natural gas, and its multitude of byproducts are linked, or should I say arc welded to the world price of the product. Gas maybe cheap now, but give it a few short years, when the planet creeps towards 7 billion or 8B people and as crude oil goes higher they all start to make the switch to gas. When that happens, can you say that gas will then be cheaper then electricity produced by hydro? Is oil at N.P refinery ANY cheaper then it is in the rest of the world? Gas has the same problem. It will fetch the highest price the world market will pay. All the competition you speak of that will supposedly keep the price of gas low isn't working for its big brother, oil. I am not saying that gas shouldn't be a part of the equation, but only that it isn't going to be the end all that brings back happy days again like some people think.
With the 500 million dollars that the state is going to give to get a gas line built we could get a mighty big jump start on a dam on the upper Susitna that would give back to the state clean, cheap power JUST FOR ALASKANS! The Trans Canada line will be built with a huge 48 or 54" line with the sole purpose of extracting the maximum amount of gas out of Alaska with the minimum amount of time. Once extracted we will once again be here at the same place wondering where the next big energy source will come. If we build a big hydro electric project for the rail belt, and then invest in smaller hydro or wind turbine plants in the more remote locations of the state we could be in control of our own destiny. If we go with the old idea of thinking we will somehow get cheap gas for ourselves, and sell what we don't use, think again, it will be exactly like what oil did for us, put a lot of money in the bank for the state, out of reach for people who are not going to make it through the winter. The Susitna dam has already had lots of investment dollars put into it before it was dropped (due in no small part to a low oil price then). If it is jobs we want, this would pay us (Not the Canadians) now for construction, and for decades into the future with the industry it would create with its constant low priced energy source. Then of course there is a lot of other forms of energy that only have been tapped in our dreams, Geothermal, tidal currents, and the ever relentless wind. If we go for gas for Alaskans and ignore the future we will always be at the mercy of the world dominated price of the non-renewable resource, be it oil, gas or whatever.
I'm not sure what is being said here? I have been on Natural Gas now for 7 years, and to me at least, it is better the fuel oil. It is very clean burning gas ,and FNG has been building a distribution system for at least the last 7 years. They have already installed pipe to the big box stores on the east side of town, and a couple of years ago the installed piping to the airport area, and down past the hospital and surrounding area's. I have yet to see a LNG tanker anywhere in the city. For some reason FNG is still installing pipe as I write this, they must know something I don't. I have never had a problem as the gas comes down the plastic line, through the meter, then to my furnace and water heater, just like in the lower 48. I just hope I never have to convert to heating oil, but if I did it all I would need to do is install the tank, a line to the furnace and change the jets. I do know that if we don't get more NG, or run out, there are many big businesses on the east side and residential many customers that will be very unhappy. Just my thoughts.
Some good questions posed here today:
1. The electrical distribution system would have to be upgraded if most residents began to use electric heat if we finally got Susitna hydroelectric up and running. Hydroelectric is a great way to go, but costs for an upgraded electrical system will be borne by GVEA ratepayers.
2. The city of Fairbanks may, or may not, get inexpensive natural gas. FNG is an unregulated utility. FNG is in business to make as much profit as possible. City residents have decided to turn their utilities over to the private sector and they will have to live with the consequences.
3. The price of natural gas is not set like crude oil. Different markets pay vastly different prices.
3. The price of natural gas is not set like crude oil. Different markets pay vastly different prices.
Yes, but that I believe is mostly a transportation issue. Due to the lack of ships to move it around and infrastructure to use the gas due to its infancy compared with oil it is still more regional then global.. As Natural gas begins to be shipped to more points on the globe and places change their infrastructure to utalize "cheaper" gas, the market for gas will start to behave much more like oil does now, and yep, it is going to get more expensive too.
As for GVEA upgrading, yes some will be needed, but they are always upgrading anyway as more people move in. The state could always subsidize the upgrades too. After all, this is a state that already hands out loads of money to business and individuals.
The reality is by the time gas comes to Fairbanks, if ever. Cheap may mean 4 to 5 times what you are paying today. This is the biggest speculation game in history. If we are so smart and could predict the future in energy, we should have been able to forecast what is happening with the price of energy today.
How many years ago were we paying $28 a barrel? Look where we are today. It is time for a reality check and an end to all this speculation and false hope. Start dealing with the here and now of what is actually happening today. You can't change the past, you don't know the future, you can only deal with today. And today we are paying a lot of our income for energy.
Like I keep saying...
There is no energy crisis..
..it's a mental health crisis.
The energy game is a Great Game of Codependency.
Oil Speculation has inflated the market by at least 200% over actual costs to produce, refine, and distribute.
There is a lot of pressure now to reverse the Great Scam of the Bu$heviks....
http://news.google.com/news?hl=en&ne...
The State of Alaska would be wise to tightly conserve spending for the next 4year long ride downhill on the energy markets.
There might finally be some PERMANENT CHANGES made to eliminate the possibility for "Grand Theft Nation" to occur again.
Alaska's Hydrocarbon Bank is worth more if it is NOT converted to dollars.
Alaska needs to convert it's hydrocarbons directly into mining it's own mineral wealth.
Gold just jumped 31 to 916.80
It's better to buy your energy with gold than dollars.
If you can't dig up an ounce a day near Fairbanks you're not trying hard enough.
Yes, it's possible to retire and be totally energy independent off the grid anywhere in Alaska, but it will cost you anywhere from $20k to $400k+ to do so...
...depending on where you're at.
AGIA was well intended, but the assumptions about the architecture are flawed. I hope the administration can find their own path out of the woods.
The global energy markets are driven by more "gray fog" goofy mysteries than readily identifiable structural costs.
The goofy war in Pipelineistan uses more Alaskan Oil than all of the states west of the Rockies.
I just drove into town for the first time in a month, and saw people driving around aimlessly stuck on stupid.
The mental health of the nation, as well as the economy, is on the rocks...
don't expect the dollar to recover any time soon..
oil isn't too expensive, the dollar is in the septic tank.
There are many big energy breakthrough technologies soon to be reaching the global markets, and america will be just ahead/behind of Africa to fully implement the innovations.
Meanwhile Alaska might go up in flames because too much methane is causing a fire hazard every summer.
time to recheck the lightning mapper
......flash/rumble
AKbearable is right on. We MUST plan ahead and build the Susitna dam and any other renewable type energy sources that studies deem prudent. Maybe even nuclear. Sell most of the oil and gas to pay for all of the above. We will get JOBS NOW, and ENERGY FOREVER.
I still don't have any answer as to whether a gas fired power plant would be cheaper to build at the source of the fuel and then transmit the power overland or try to transport the fuel and convert all the power plants, homes and businesses to use the gas.
The dam will need some type of bypass to prevent silt build up on the upstream side and a ladder to allow fish to bypass it. Then the questions of where to put it and will it work in the winter? Also, we still have to build power lines and relay stations.
Nuclear plants can safely be put in the middle of ANWR if we can get the feds to approve it. The Federal Nuclear Regulatory Commission is the major hold up on that power source. So don't count on getting a Nuclear plant, we can't even get permission to drill a hole in ANWR. We don't have a candle's chance of heating a house in winter at getting a Nuclear plant built.
Even using DT's "fast, easy, and cheap" molded plastic pipe to get the gas to Fairbanks, we still need gas fired power plants for the long term to replace the oil fired ones. The question is where to build them, how many new relay stations, and how much new power line will be required?
The price of steel is going to go up again, invest wisely.
My understanding og the Susitna dam is all the study's are done. The research is in we even have builders willing to build with no money from the state except to back them with bonds in case something goes wrong. Yet we sit here being strangled by the oil & gas industry and the elected officals who support them.....
Jay Ramras is a smirking parakeet. He's a big fan of the private sector. He should get back there, quickly.
legislators should look out for Alaskans, not corporations. anyone ask the great Exxon shareholder Ramras what he thought of the supreme court ruling? seems like a reasonable question.
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