Good morning, and welcome to the House Energy Committee. We'll go ahead and call this meeting to order
the time is
What 104?
On Tuesday January 27th members present are representative Edgeman representative cop representative Costello
Co-chair representative mirrors and we have in the room also representatives act fields
and I'm Kai Holland, co-chair of the Energy Committee.
Thank you all for joining us today,
looking forward to the meeting that we have planned,
and appreciate all the work that's gone in.
Those of you that were able to attend,
particularly with the weather,
and the folks that have done all of
the worked to prepare for the presentations.
Let's see I'd like to remind members please silence your cell phones also note that we're allowing the use of electronic devices during committee meetings
Just a reminder that staff and members the audience may not approach the table if you need to pass a note to committee members
Please get the attention of my committee aid Tim Truer who's up here
And he'll help you out
I like the recognize that representative reference has joined us
Continuing, and importantly, I'd like to thank Cheryl Cole, the House Energy Committee
Secretary over here, who has been with us for a while and knows an incredibly large
amount about all these issues now, Zach Lahorn and Jude Augustine in the back from the LIO
who are providing support for the technology and teleconferencing support that we'll rely
on today.
Thank you for that.
begin the meeting today
The first item of business before the committee is going to be a presentation of the regulatory Commission of Alaska and rail belt gas import facilities
Last year the Committee posed a question to the RCA what statutory changes might ensure that the RC a takes a more holistic approach
This was in regards to our concern about the potential of multiple large energy projects
developing in the Cook-Inlet area, including in this case LNG, which will be a significant
focus today. But it also comes about because of a concern
about how do we think about managing many large-energy projects that in some cases could be
energy, and yet all of these projects come at the cost of the rate payers who ultimately
are funding everything that we do, particularly in a co-op model.
And this not only affects our rail belt rate players, but it is the railbelt cost
of energy that then is also the floor for our PCE calculations and our support for a
rural energy users too.
So this is important for us to understand how do we manage the costs of
manage the flow of all the projects to the benefit of
all Askins, but certainly there's been a concern about the
availability of gas for South Central and our power
generation. It was only a year ago that we were seeing a lot
of concerns about, did we have enough gas? How would we
bridge to some long-term solution, a gas pipeline or
other options? I think today we're seeing that
with the hard work done by the utilities and the gas suppliers that that supply issue
particularly assisted with storage no longer is quite the dire situation it was a year 18
So back to trying to stay closer to script, today though we'll be looking at some of these
developments in a little more detail and have an opportunity both to get updates as well as
have a chance to talk about some questions. In terms of the format, I think our intent here is to
the presenters and then we're going to move on to some presentations with Harvest Midstream
and EndStar. The intent there will be to have those initial presentations by Harvest and MidStream
and any clarifying questions. What we are really hoping to do though is then bring them back up
to the table together for a deeper conversation and questions at that point. So just kind of
So back to where we're going to start off with the RCA here. R.C.A. Chair John Espindola, Commissioner Steve DeRise
will be
presenting for the
R CA and if you'd please introduce yourselves for The Record you can begin your marks. I understand
Ms. Claire Knudsenlotta and Miss Julie Volger are also available for answering questions and a reminder to everyone to introduce yourself as we
continue forward with that. So
If we can begin with the RCA presentation
Mr. Espedola and are you there online and ready for it?
Yes, good afternoon, and thank you for allowing the regulatory Commission of Alaska the opportunity to participate in this committee hearings
For the record my name is John Espendola chair of the Regulatory Commission
of Alaska on the line with me is commissioner Steve DeVries utility master analyst Julie Volger
and utility engineering analyst, Claire Knutson-Lada.
We are here today to respond to a question from the committee.
The question posed to us was, what authority the RCA has
to reduce the risk to consumers
at multiple gas import facilities are constructed?
We addressed this question in part in an order we issued last year.
That order is U-25004 order number five,
which was also discussed with this committee,
As we noted in that order, under the Natural Gas Act, the Federal Energy Regulatory Commission
has exclusive jurisdiction over the citing, construction, expansion, or operation of an
LNG import facility used in either foreign or interstate commerce.
Please refer to page 29 of that Order.
Because we lack jurisdiction of L&G import facilities, we lacked the authority to assess
would be contrary to the public interest under AS 4205-221-D, also noted in page 31 of that
order, Footnote 128. However, while we lack the jurisdiction over the LNG facility, we
do have jurisdiction of gas supply agreements and terminal use agreements used to supply
Our authority to review gas supply agreements and express scope of that review authority is delineated in AS4205-141D.
We will stay online for the committee to ask us questions throughout and after the presentation.
Thank you.
Great. Thank You Chair.
Are there any questions to begin with?
Yes.
Uh, thank you through the chair to, uh, Chair Aspen Dola.
So, um, our,
Thoughts here that we might have two facilities that are asking for approval that might not
happen at the same time.
It's our understanding from previous conversations that the RCA has only been limiting itself
to looking at dockets and the request that it has in front of us.
Does the RCAA have the ability to open another docket to take up the matter of how to address
facilities and what would happen to consumer rates if there were there was
an over building of infrastructure.
Chair Mears, please from the commissioner with the regulatory commission.
Can you hear me? Yes.
Okay.
So your question about whether or not we have the authority
to review the duplication of facilities, I believe,
is one that Chair Espindola just spoke to.
That's a specific perk jurisdiction.
So we don't have
the Authority to question or to interject ourselves
into the question of the duplication of LNG
and for facilities.
I hope that answered your question. If not, I'd be happy to follow up if you want to clarify it.
Thank you. I'll follow-up on that. So, the commission has the ability or has their responsibility to approve contracts.
If you're approving contracts for a gas supply agreement that has embedded costs for new facility.
What happens if another facility comes along that is asking for a reimbursement for capital costs
that would increase rates to the customer?
Chair Mears, Steve to raise again for the record, we would review those costs in the
context typically either of a rate case where those were those cost were presented to us or in
review our request for approval of a gas supply agreement source of gas to consumers.
That would be within our jurisdiction.
Follow-up?
Yeah, follow-ups, please.
So through the chair to Mr. De Vries, if you are evaluating a second contract, that
facility, is it within the RCA's ability to deny the reimbursement of those costs?
If Chair Mears received degrees for the record, yes, we could if the costs were
improved and incurred. That would be a subject that could be reviewed by the commission if
Thank you through the chair to Mr. DeVries.
So the way things are set up now,
if this situation were to occur,
the RCA doesn't have the ability to weigh in
until somebody had already signed contracts
and was on the path of building a secondary facility.
Chair mirrors to the extent that that was a question.
Yeah, we wouldn't be reviewing that until it was presented to us for review in conjunction
with a request for costs to be included in rates.
Thank you.
Can I make a final comment?
Thank You.
So it seems like the tools we have in front of us and we'll continue to look into it.
Keeping the private sector from over building facilities and passing costs on to consumers
Thank you other questions
If I can then I'd like to follow up on this issue because I want to take it I think back to
the question we asked a year ago
And I don't know if this is for Chair Esmondola or could be the commissioner.
What statutory authority changes might ensure that we could take a more holistic
view of these multiple projects, particularly as we start looking at
not only the overlay of potentially multiple LNG projects but
gas storage projects and gas supply agreements, there's a layering here of different activities
and it seems like we have created a structure that allows us to silo each one of those decisions
for prudent review of that decision silowed but not the ability to look more broadly.
Is there a statutory authority that might help RCA in fulfilling a mission of
ensuring that the rates that we're paying long-term are the most economical and
we are getting the best value out of what will end up being the rate that
we pay.
Through the Chair, Co-Chair Holland, this is John Estendola for the record.
We did discuss this at a public meeting last February and we do feel we have the
statutory authority that
take care of what comes in front of us.
I think the nuance here with this particular issue
is that we're dealing with the federal regulatory entity,
which supersedes our authority.
We are anxious to hear these two presentations in
front us that may shed more light.
But like this body, we only know what's been provided publicly.
And so as the presentations take place today,
You are welcome to ask us more of these questions throughout.
Great. Thank you.
And to follow up on that, could you clarify for me we've heard repeatedly
that the FERC jurisdiction preamps any RCA jurisdiction on these projects.
Is that holistic in terms of FERC not only approves the siting, the construction,
the operation of facilities, but are you suggesting that they also oversee the contracts
that are associated with their use,
the rates that would be generated from them?
It sounds like maybe we're ascribing to FERC more than they might do
beyond their facility scope of work.
that there is actually perhaps an overlay where RCA does have some involvement with these
facilities that go beyond FERC's initial licensing and authorization for this facility.
Could you clarify for me where the line is between what FERC is responsible for?
managing and where it crosses over into the regulatory environment where RCA does have any
authority with these import facilities. Through the Chair, Co-Chair Holland, this is Commissioner
Steve DeVries. While the first has the jurisdictional authority, exclusive jurisdictional authority
over deciding construction operation of an LNG import facility where
That facility has a facility use agreement with a LDC local distribution company that's
providing gas supply services to consumers within the state that gas-supply agreement
and the facility or terminal use-agreement that utility might have with the operator
or owner of the LNG facility, the costs associated with that that are sought to be
That's the dividing line that essentially FERC has carved out where it makes it clear
we're a state commission such as ours has the jurisdictional authority to regulate rates
that impact consumers on an interest state basis, which is where we are.
to follow up? Yes, Representative Cop. Yes. Thank you, Chair
Pollander. I think it's important to realize that the private sector I can't imagine has
any interest in over building facilities competitive to see which one goes forward. They do have
they've made it clear has the say on which one goes. I can't imagine them permitting two import
facilities that are a mile apart. Only one is going to be competitive and so ultimately we're
only going have one and we have entities that making their best cases as which is the best interest
Thanks. I'd like to make a comment on that.
I appreciate that perspective of Representative Copp,
but I believe we're looking at two facilities that are looking to modify existing FERC permits.
Nobody's applying for anything from scratch,
but we will get to that here very shortly and clarify that,
but thank you for that prospective.
Any other questions at this point for the presenters from the RCA?
Okay, hearing none then thank you for the the presentation
I hope that you can stay on the line in case there are additional questions that may come up that
You could help us with
Through the course of the discussion
Next we'll hear a presentation from Sean Colarsa
President of Harvest midstream ask committee members to keep their questions
Fairly brief for clarifying questions at this point. We'll have time for additional questions after the next presentation
Mr
Colossa, please approach the bench introduce yourself for the record and proceed with your presentation
Good afternoon co-chairs mirrors Holland and distinguished members of the house energy committee
Thank you very much for that opportunity to be here to testify today
For the record, my name is Sean Colossa.
I am the president of Harvest Midstream.
And again, really appreciate the opportunity
to be here representing the Harvest Team
and our role in supporting Alaska energy infrastructure.
I'm here today to provide an update on Harvest,
our ongoing operations across the state,
as well as an Update on the proposed
LNG import facility at Nikiski.
and how this project fits into Alaska's
near and long-term energy reliability needs.
Thank you again for inviting me today. With that,
let's start out with slide two. Now I know that many of you
are more familiar with the producers and the utility customers
within the state. I really want to spend some time
before getting into the specifics of the project.
to spend a few minutes providing context on who harvest
is and how we operate. Harvest
is an American Energy Infrastructure Company. We were founded in 1993.
Our sole focus is on developing, constructing,
acquiring, owning, and operating critical
energy infrastructure that moves energy safely and reliably
from where it's being produced to where its needed.
Simply put, we don't drill oil and gas wells and we
don t sell gasoline at the pump.
Our interest really is, and our role is the
infrastructure in between.
The pipes, the plants, in terminals, LNG facilities,
and any other infrastructure that make the rest of the system work.
Harvest is really the only mid-stream focused company
operating here in Alaska.
Today, Harvest owns and operates infrastructure, as you can see on the
across eight states, and we have that organized into six regional business units.
Each of those regional businesses are led by a vice president with teams
that understand the customer needs, the
customer base, operating conditions,
and the regulatory environment that is specific to that geography.
Across those regions are assets span commodities
and a full mid-stream value chain.
That includes gathering, processing, and treating natural gas,
separating and fractionating natural-gas liquids,
transporting oil and condensate,
and producing LNG,
including facilities that we have in Colorado,
as well as the North Slope of Alaska.
Now, in terms of harvest,
we do have common ownership with Hill Corp,
but we are a very distinct and separate company.
We do have a commercial relationship, Hillcorps a key customer within the state, also do some
business with them in our Four Corners region, New Mexico, Colorado. But across the rest of
our footprint, we are a separate, separate company with our own employees, our
own management team, governance and balance sheet. And the majority of our business involves
From a financial standpoint, Harvest has its own bank credit facilities,
including a term loan, a revolving credit facility,
as well as several tranches of public bond debt,
which reflects really how we're evaluated. At the end of the day,
it's based on harvest assets, our cash flows, and our operating performance.
Across our company, you can see on the table, we employ 650 people.
of which 62 are in the state of Alaska. We're very proud of the employees we have
that live here, work here and have been part of The Alaska's energy system for years.
I wanted to start here because the project that I'll be discussing today really builds
directly on this operating foundation, particularly our experience owning and managing long-lived
Now that I've given some background on harvest overall, let's turn to slide three
Where I want to spend a few minutes walking through our operations here in Alaska
Alaska is a very meaningful part of our overall business. It's where we operate some of ours most critical infrastructure
Harvest has been operating in alaska for over 15 years with assets both on the north slope and in the cook-inlet
And we've grown that presence over time through a combination of acquisitions as well as targeted growth projects.
On the North Slope we own and operate approximately 156 miles of crude and condensate pipelines.
These assets were acquired from BP in 2014 and again in 2020.
These pipelines are part of a critical physical system that moves oil from the producing fields
into the Trans-Alaska pipeline system and ultimately serves predominantly refineries on the west coast.
Now, that role may sound very straightforward, but requires operating reliably in our conditions,
coordinating with producers, and maintaining assets that are essential to the broader system.
We also have placed our North Slope LNG facility into service in December of 2025,
adding to our existing North slope operations.
Harvest also holds a 49% interest in the Trans-Alaska pipeline system and that is a core piece
of Alaska's energy infrastructure operated by Aliasca in coordination and governance
provided by and among the owners.
In the Cook Inlet, we own and operate over 225 miles of natural gas pipelines supplying
critical gas to utilities throughout the region.
We also operate approximately 73 miles of oil pipelines that supply crude oil to the
Keeneye Refinery.
Our Cook Inlet Pipeline system harvests Alaska completed the cross inlet pipeline project
in 2018.
That was a project that really reconfigured the existing infrastructure that we had and
to be moved across the inlet by pipeline rather than by tanker traffic.
So that really removed the risk of operations at Drift River
and the tanker movements from the Christie Lee platform.
This was a project that had been discussed for years by multiple parties.
And Harvest was really proud to partner with our customers
and work with regulators to gain approval for the project.
was improved operational safety and reliability
that was achieved through targeted additions
and modifications to existing infrastructure.
Across Alaska, our focus has been consistently on safe, reliable operations
and long-term stewardship of essential infrastructure
a recent Harvest Alaska project that helps provide reliable gas supply into the
interior of Alaska. Harvest North Slope LNG facility is the first project to
commercialize natural gas off the North slope providing a new reliable source of
gas to serve the interior Alaska the scope included power generation, gas
and truck loading systems, and the execution required coordination with our customer,
IGU, multiple engineering and construction firms, including local firms.
NANA was a key construction partner to us, providing Alaska-based expertise
in the core of execution on this project. The project progressed from commercial agreements
and the facility is operating and serving customers today.
This project really underscores our focus as a company
on developing solutions to Alaska's gas supply challenges
that work for customers in different parts of the state.
Next, to frame the discussion around Kenai, I think it's helpful to start with the planning
outlook for gas supply and demand in South Central Alaska shown on slide 5.
So this chart reflects Cook Inlet Gas Supply and Demand forecast developed by the Alaska
Key takeaway is that the overall market demand in South Central Alaska remains relatively stable at about 70 BCF per year
There's no spike in demand that is driving this picture
What changes over time is a supply?
even with continued development cook and lint production
Declines steadily as we move into the latter part of this decade as a result the region transitions from a balanced market
to a structural supply shortfall, not suddenly but very predictably. That forecasted gap is what
has prompted us to begin advancing a potential LNG import solution to address the needs going
forward. Our project provides speed, certainty, but also flexibility that I'll get into in the
we believe is a critical element that I'll highlight as we go through more
description of the project. This provides South Central Alaska
with the flexibility to be responsive to the changes in this forecast
to either accommodate additional local development
or further important needs.
I want to turn to slide six and cover the Kenai LNG site
itself and how we're thinking.
Yes.
Just to say, I think before continuing on,
I was debating because I know we want
to hold some of the questions towards later.
But I just feel like if you could back up one slide for continuing
on because we were kind of anchoring on in on this being
the production demand view of things.
forecast that's cited there. It seems that in recent hearings and presentations we've seen
some pretty significant updates to the supply gap analysis that show that the gap right now
begins sometime I believe around 2030 or 2031 as a combination of the success with some of
and some of the new producers that are coming online.
And I wonder if you could comment on the characterization
of this production demand supply deficit,
because I think we're kind of painting a picture here
that I'm not quite sure if this is the picture
from the harvest view of what harvest can supply
and the demand that you have with your contracts.
or is there a little more we should say about the more holistic view of the Alaska gas market
supply and demand situation. Could you clarify this slide with regards to what we've seen,
like in house resources last week? Yes, to the chair. My response is really a couple of things.
One, we don't sell any of natural gas to any utility. So any contracts to anybody that's currently
our focus is on infrastructure and you know really as I mentioned you
know getting out of this slide moving to the next one was
we recognize this is a point in time and there's going to be a lot of different
things that are going happen. There's gonna be new supply development
potentially or as we go into the future you might see declines happen more
rapidly and really setting the stage for our project
which can be very flexible in terms of how much that
And I'll go into those details as we start working through the specifics.
Okay, let's continue on.
Thank you for taking the interruption.
All right, so thank you.
And so really just going through this site itself and how we're thinking about using
existing infrastructure to really address the needs that exist.
The Keeneye site, which we acquired in 2025, is summarized here.
on over a hundred acres of industrial land, as highlighted in red,
providing a very large footprint with the flexibility to accommodate any
additional infrastructure that ultimately may be needed.
It's an existing LNG facility with a long operating history
as a large export facility that's currently idled.
marine access, pipeline connectivity that were all designed again for large-scale LNG operations.
Importantly, this site is already pipeline-connected into the regional gas system and directly to the
Keeneye refinery. Our proposal is to repurpose this sit to enable L&G imports. The project would
reuse existing equipment where appropriate and make targeted upgrades to allow L and G to be
vaporized and delivered into the local gas system.
What makes this project very cost efficient
is the ability to utilize the existing footprint
and infrastructure, and specifically dock and tankage.
While the project is focused on serving in-state demand,
the site also preserves optionality
to be part of export solutions
if a North Slope gas pipeline is ultimately developed.
So, next on slide seven, we think this timeline is useful because it really shows the Keene
ILNG site is long-standing energy infrastructure with an existing regulatory foundation that
Harvest is building on.
This site has been part of Alaska's energy infrastructures since it was originally developed
Over its operating life, the facility was owned and operated by major energy companies
and then remained subject to federal and state regulatory oversight throughout.
Exports ceased through the facilities just over a decade ago as Cook Inlet gas supplies
declined and the Facility was placed into warm idle rather than being decommissioned.
As part of that transition, Marathon initiated the regulatory pathway to allow LNG imports.
On February 7th, we announced an agreement to assess the feasibility of the redevelopment of
the Kenai LNG facility and really we entered this phase with probably the same questions
that many of you have and that is what is the condition of site and the facilities and
that was a key reason that we enter into this due diligence process.
and we found that it was very well maintained and very
well positioned for LNG imports. We completed
that analysis and on November 11th of 2025
we announced that we had acquired the Keeneye L&G facility.
So this was another milestone for us in developing a project, putting existing
L and G infrastructure back to work to meet South
and strengthen long-term energy reliability for the state.
Now import capacity really is defined through amendments to existing authorizations,
including a FERC import authorization and U.S. Coast Guard Waterway suitability assessment.
We've now filed necessary applications to advance the project. With that foundation in place,
of what we're proposing at Keeneye.
Yeah, we have a question.
Representative Meyers.
Thank you through the chair, just like clarifying.
So for the FERC amendment, I recall that was in the news
just earlier this month that that application had been made.
I haven't done any work with FARC,
so I don't know what their timeframes are for things.
Do you have an idea of how long that process will be?
Yes,
we anticipate somewhere in order of six months
and I'll talk about that some more as I get to the overall project timeline.
I have a question from representative so thank you. I appreciate you being here
Does your application with FERC also include an eventual export
Activity and if so could you talk about that?
Through the chair
No, it does not it contemplates imports. Thank you
Thank You
All right
Turning to
Slide eight really want to provide an overview first of the scope of you know
the overall process just to walk it through and so if you look at the map
LNG tankers would come in to you
know what's listed as number one and it'll attach into you
know items number two and three so that's where the L&G you
know tanker will come and then L and G'll be pumped from the vessel into the
It'll go through the three existing storage tanks that we have.
It will go though new vaporizers that are highlighted at item six.
Take LNG from liquid to gash's form and then the gaskets compressed
and put into the existing pipeline interconnections
and ultimately be transported down the pipeline network
to underground storage facilities. This slide summarizes the defined scope.
of the regastification project in total that we're proposing at Keeneye.
As I stated earlier, we are pursuing a permitted capacity of approximately 20 BCF per year.
That is sufficiently sized to address near-term supply needs in South Central Alaska.
However, the facilities we'll be putting in will have a physical capacity
of up to 73 BCFs per Year.
On the marine side, the work that we have is focused on upgrading existing infrastructure,
reinforcing the breasting and mooring dolphins, adding limited new mooing capability and upgrading marine loading arms.
Those upgrades support vessel operations with current common LNG vessel sizing.
In order to maintain shoreline stability and safe marine operations,
we're reinforcing and extending a shore line bulkhead in very targeted areas.
Onshore, the scope includes installing LNG vaporizers and compression,
along with modernizing control systems and ensuring that we've got those pieces in place,
and specifically monitoring and safety systems.
All work occurs within an established industrial footprint, and notably, no new LNG tanks are required for the initial design.
Now, Harvest has already spent millions of dollars on front-end engineering design, utilizing select experts,
getting material and construction quotes as well as lead times, all at our expense and risk to define the scope and the overall project timeline.
Our overall project will cost between about 300 to 350 million of total capital.
We're continuing to work forward to finalize some of the details as we work to a final investment decision
that will tighten the overall capital cost within this range.
I want to emphasize a couple of things here.
in our proposal. This represents the most capital efficient flexible option to adapt to the demand
requirements. We can expand our level of imports via filing for an amendment with FERC and a new
waterway suitability assessment with the Coast Guard. Longer term, if the
demand rises to total rail belt needs, we would add additional tank and also look at some of the
Also, we were maintaining flexibility for this site to be used in the future if necessary
is part of an export solution.
Facility was an Export Facility, and that equipment will be bypassed but remain on site.
Next, turning to slide 9.
and highlights why KENI-LNG provides speed and certainty in addressing the near-term
gas supply needs. The ability to repurpose an existing LNG facility allows us to
move faster with lower execution risk.
The project is scoped to function either as a temporary or long- term solution for
Upfront capital is minimized to reserve flexibility as these market conditions change, including changes in local production and potential development of a North Slope gas line.
Keeney LNG is already a FERC authorized facility with a long operating history.
Because this project repurposes an existing L&G terminal, FERC granted a waiver of the pre-filing process, allowing the project to advance directly.
to the amendment review and you can see here that we're anticipating that to occur in Q3
of this year and get approval for that. That waiver just reflected again the determination
the project scope is well defined and appropriate for amendment versus first-time authorization.
Both the FERC amendment and the U.S. Coast Guard waterway suitability assessment
We completed feasibility work and initiated feed activities last year.
And again, reemphasize that we have invested our own capital to advance this project,
including acquisition and development costs.
Based on current assumptions, the project could be operational within two years of
committing to off-take agreements.
So under our current planning assumptions that supports targeted in service date in
late 2028 of, yeah.
Q4 of 2028.
Finally, few concluding comments on slide 10. Number one, harvest is American Energy Infrastructure
Company with a diverse and deep skill set. We've been here in Alaska for 15 years,
and we are committed to ensure the safe, reliable, and flexible infrastructure solutions for the
Our project provides the most cost-efficient entry for solving near-term gas supply shortage
in South Central Alaska at $300 to $350 million of total capital.
This will enable a flexibility to easily expand beyond the initial commitment and we're also
poised to be part of an export solution.
Great. Thank you, Mr. Colossa. Are there any initial clarifying questions you'd like to ask right now? Yes, Representative Mears.
Thank You through the chair. And thank you for the presentation. Of course, I have a million questions, but I'll limit myself.
So on the timeline slide, which I believe was right before this on slide nine,
Take FID. Yes to the chair yes we want to get customer commitments prior to getting to F ID.
Follow-up. Does that include approval of the contracts by the RCA?
Chair yes ultimately we'll need to see approval those those contracts.
Follow up. So do you need them prior
To the chair, you know, ultimately we want to have customer contracts in place to make FID and
That is the predominant thing that we're working towards and then we'll start spending more meaningful capital on engineering and long lead items
Thank you. I appreciate that
Yeah, well if I can follow up to your question first and what can you say, and I understand, you know, confidentiality is
I'm sure affecting much of this. What can use say right now about any contracts that have been
Established that are available for us to understand how much
Of the current planned import capacity has been committed and that you're working on now to the chair
We've advanced a number of those conversations
But we are still finalizing terms and finalize those with a variety of the utilities.
Fair enough. Thank you. Representative Mears.
Thank You through the chair.
So I appreciate having an idea of a capital number.
So, I saw on the slide and noted that that's at the 20 BCF level.
Are you able to share and you have numbers for what a build out to that.
70 to 73 BCF level would be and if you have costs for what it would take to do export.
Yes to the chair for us ultimately as I mentioned the facilities will have will
have the capability of getting up to that 73 BCF per year total. As we move forward though
more towards that 70 BC F level we'll add another tank an additional tank is probably order of
We'll then look to see if there's any other redundancy that we need to put in place,
such as additional vaporizers, although we already have the capacity for that. So
that's a reasonable number to go with. Thank you. And did you have a capital cost for being
able to grow the other direction and do export? To the chair, I do not have
a capitol number for it right now. We will have all the facilities, again, just bypassed on site,
All right, thanks.
Representative Cassella, did you have a question?
Yeah, thank you.
And again,
thank for being here.
Looking at slide five,
and I don't know what assumptions were made there
about the supply deficit,
but it looks like it might be possible
that the supplied deficit occurs
before your schedule to come online.
And I'm thinking maybe this might
be a questions for somebody else.
I know we do have stingsa and we have storage,
but could you talk about
the urgency here and how you're meeting that?
Sure through the chair
Absolutely, we believe that it's important to create these options as soon as possible
And we are going to be the fastest facility to able to come online to meet those needs as referenced earlier
We know that this picture has changed slightly
But we remain ready and we're the fastest quickest solution and the most cost-efficient to achieve this
Thank you, thank you. Yes, sir representative a reference
Uh, thank you, uh, co-chair. Um, and thanks for being here today.
Get just a couple of questions, um, just because this is not my realm of expertise
always. So,
um at 20 BCF, which is the proposed,
uh project in this,
uh element, that's the cost I heard at 300 to 350 million in order to
get to what is a projected.
And obviously, our projections change as we've already discussed.
If you have to implement, let's say up to 60 to 70 or 73,
is there more than one storage tank that would be needed or just one?
And you said that was 150 million.
Yeah.
Our estimation through the chair,
our estimation at this point is that one more tank, you know, ultimately would
be sufficient.
However, we would look into a variety of different factors, such as vessel
and accommodating quick offload of the vessels.
Okay, and just to follow up with my mind.
You know, we hear a lot of horror stories about permitting.
It felt like, I mean, six months to eight months
seems relatively reasonable for FERC,
but that seems also like it could be short.
Is there some things that I don't know about
that could happen, you know request for new data,
a delay of some sort?
I'm mean in your experience.
Are you confident that six to eight months is doable?
Yeah, through the chair, we're very confident on the regulatory timelines.
We think that we've provided enough conservative in the overall estimate and the
overall timeline to be able to accommodate. Okay, thank you.
One last question I have for the moment before we
maybe proceed on to the next presentation, but just to clarify,
I assume, that I would like your clarification at this
is significantly dependent upon additional storage reservoirs being available to be able
to operate the facility that your intent would be a ship.
comes in, offloads, goes into storage and then later it's drawn out of storage in order to,
I hope, allow you to buy gas when it is the most affordable and be able to store it and use it
later as we need it. Could you just describe briefly how this project is tied to any sort of
process of reaching any sort of approvals as well as I assume that may interface in with
some of the RCA approval for some the gas supply contracts. I think storage is another layer in
here that's I, think pretty important to this process but maybe you can clarify that.
Yes to the chair you know directly yes storage is important component of this and that is not something that harvests is
Participating in we do anticipate that between what we've heard in the market from sings a you
Know hillcorp and star and others that there will be sufficient storage to accommodate
Thank you. Yes, I represent a mirrors
Thank you. I appreciate knowing capital costs, but when we get down to it customer rates are important
So I assume there'll be market purchase of LNG and transportation costs
Can you share what the cost of basically going through the facility are?
To the chair
Currently going though process, you know
Confidentially working with our customers to negotiate those final terms. So that will be subject ultimately through our CA filings. Thank You
Thank you. Any other clarifying questions right now? Wonderful. Well, thank you, Mr.
Klossa, for the presentation. We'll shift now to hearing from John Simms,
President of N-Star Natural Gas Company. Mr Simmms if you could approach the
bench and introduce yourself to the record and proceed with the
presentation and again our hope is that in a few minutes we'll bring Mr Klassa
back up for some continued questions.
Thank you for the opportunity. My name is John Sims. I'm the president of N star natural gas company and singsa
Before I kicked off my presentation, I wanted to address a couple
comments I heard from
Actually the chair and from the commission
Mr. Chair you made the statement about we're in a better place than we used to be I think it's really important to understand what that place is
So from gas the pipe perspective
and STAR has almost all of its gas under contract in 2026.
That is different from prior years where we had all our gas
under-contract.
The gas that we're receiving to fill that void
is interruptable volumes.
And that's a really, really important distinction.
There's no obligation for the producer.
or for the utility to take that gas and so from an obligation to serve perspective it makes
utilities very nervous when we don't have firm obligations in hand. Yes, we have seen uptick
in production but we've also seen wavering on commitments for what is going to be delivered.
So really important distinction we are by no means out of the woods and that type of
to restrain. We are not in a good place. Full stop. On January 7th, I sent a text to the
governor because we had forecasted temperatures of negative 22 in Anchorage. If those temperatures
would have materialized, i would not have had the gas to serve my customers.
Full Stop. Luckily, it did not materialize, but if it would've, we would of asked the military
to cut back on their consumption, MEA to possibly switch over to diesel. So we are
we do not have what we need and that's why we're going through this exercise but and it gets worse
right so 2027 2028 2029 2030 like we have a long stretch of really really challenging conditions
and we needed to make sure that we are all communicating that to the general public
and working together as utilities which we
are addressing one of the comments that was made by
by the commission, the RCA, and I obviously have a lot of respect for them, but I think
they're viewing this through the wrong lens and the
wrong perspective. Both N-Star and Shoe Gechoelectric
have asked the Commission to tee this up,
and it's not necessarily, can we get approval in rates for these facilities?
as a commission, as an utility group,
and see what makes the most sense for the state of Alaska.
They can educate themselves.
They absolutely have the power to bring us in
and we can have confidential discussions in the commission.
And we've done that before.
We did that with Cinza,
where the Commission walked us through some questions,
some very challenging questions.
And, we looked at ourselves in a mirror and said,
you know what,
we probably could do that.
And the result of that process is a better utility.
The Commission has a role.
dive in and get educated on this, they got to bring us in. We're trying, we're
trying to do as much as possible from a communication perspective. And again, it's
not about approving rates. What Commissioner de Vries said is absolutely
true. They can't do that proactively.
They have to have a filing in front of them. But that doesn't mean that they can
understand the current dynamics of where we are with the market. So I, looking at
Looking at the title, it's unfortunate what the
title says, and it just kind of occurred to me.
This says the N-Star Glenfarn LNG Import Terminal Project.
To be very clear, N Star is the customer.
We have no capital investment.
We're not going to make a dime off of this project.
This is all about serving our customers.
So it's important to understand that because a lot of folks have said well
You're just doing this because you have an opportunity to make a you know
11 8 7 5 you're ready to return and that's the reason reason why you are promoting that
No, we're promoting this project because after two years
4.6 million dollars of research analysis
Understanding market demand this was the project that rose to the top
So we have no financial incentive on this
Just a quick system overview for those of you who may not be familiar
That number actually is 3800 miles our ops guys are always trying to be braggadocious about that
But a 38 hundred miles of pipeline serving over 3,000 square miles the shaded yellow there
Represents end stars service territory so you can see that we serve
Willow all the way down to Homer
Green represents APC, which is our pipeline transmission
company. We're actually two utilities working underneath
one name,
which isn't star. But that is
our transmission service territory. Our customers
transport about 60 BCF of gas on an annual basis, 38 BC F
in total annual volumes, 156 customers,
156,000 customers and SINGSA is a critical
and important part to how we operate our system.
And on January 12th, we filed an application
with the commission for additional storage.
This would be an end-star-owned asset.
The question about what does storage look like
and whether or not you need it,
it is critical and required for LNG import.
Have to have it.
touching on just some very, very high level concepts
before we get into the weeds here on the project itself.
When you look at what we're calling the Cook Inlet Gateway,
we do see that as having lower cost of regassification.
An important piece here
on, you know, the potential for no-stranded infrastructure
and it is aligned with the long-term vision and view
of the Alaska energy future.
That's one of main reasons why we picked this project
and we'll get in to that a little bit.
And then the reliability of gas supply.
There is no producer in the market today that can
Supply and star natural gas that 38 BCF the 320 million a day and deliverability that we need
There's no entity in that they can do that today. So we have to find a solution for that starting in 2033
Yes, Hendrix and Fury has been very, you know, bullish on what they can do.
It cannot meet all the needs of South Central.
And I think quite honestly from an operations perspective, one of the values that Hillcourt
brings to their, to the customers that they serve is they have hundreds of wells.
That is not the case with Fury.
They have a handful.
you're losing a significant amount of production. So as a utility, we want to make sure that we
have diversity and supplies as well. And that's one of the values that Hillcorp has
with the contract that they currently service with today.
The concept that We have for our project, I think, has been discussed.
And when we went through the evaluation process,
You know, Harvest has been a very reliable operator, both on their pipeline.
You can see the positive things they're doing for the communities of Fairbanks now with
that important project that they just got online with IGU.
We looked at the possibility.
Could we bring down trucks from the North Slope?
We quickly realized one enormous cost impact for customers.
I think they are paying around $23 per MCF compared to 10 what we're paying, so a massive
rate shock.
So I think our estimate was 54 trucks a day would have to come down the hall
road in order to meet the needs of our customers. That's not practical, that's
not reliable. So when we got down to it, there are some very good options out
there. A lot of them, and it was confirmed today, a lot
of then are in the half a billion dollar ballpark, right? That project that was
just discussed would require about a half-a-billion dollars worth of
investment. And similar to the Glenfarn project, about half
When you look at what would be required for long term contracts, right, that that is not a five
year deal that you're making with somebody that invests a half a billion dollars. That is a 15, 20,
30 year obligation that the utility has that does not go away. So you are always going to be stuck
with that cost of the infrastructure. From a commercial perspective, if we have the opportunity
have the commercial flexibility to roll that directly into a pipeline coming
down from the North Slope and take advantage of North slope gas and Alaska
resources. That to me seemed like a no-brainer as opposed to the other option
which is just we're locked in for a long-term contract. We could make that
contract shorter but it's similar to a mortgage.
You don't have a five-year mortgage on a brand new home.
You have long ones so that it spreads out the cost, right?
And so, that's what we want to do for our customers,
is spread out that cost as much as possible
so there isn't that huge impact.
And again, the flexibility to commercially
within the same contract,
convert that over into an AKL and G option for us.
That would require, as we look at this slide here,
that would acquire converting that import facility
into a export facility.
Is that something can be done?
Yes, it can can done.
It happens all over North America.
So these are actual projects that originally started out
as import terminals and were later converted
over to export terminals.
So we have plenty of examples on how that can actually be
done and it is very feasible.
This is where the rubber meets the road.
Ultimately, what is it going to cost to customers?
I think one of the things that you're seeing here is demand is key.
The volume that goes through the facility is ultimately going to result in the lowest
cost possible.
So if it were just N-star alone and everyone realizes that N star doesn't necessarily
need this until 2033, so we would anticipate volumes coming in in 2032 to start meeting
that need, 20 33, you are looking at $15 gas.
Makeup look like it's a combination of the lng import price, which is that dark purple
the tugs which we would need and the terminal cost if
We didn't have the LNG or let's say cooking lit gas
All of a sudden rebounded we will still be paying that three dollar and seventy cent cost at the bottom
We've made that commitment. That's the commitment for the infrastructure
Yes, we could not pay the LNG import price because we wouldn't need the volumes, but
it's important to realize that once we head down this path, whether it is the harvest
project or whether the Glenfarn project, that's the commitment that we've made and
we have instantly increased the price of the commodity here in lower 48 by adding that
infrastructure cost.
The price down below, the entirety of Cook Inlet Demand going through our project.
just N star alone down below. If you include all the utilities, 1352. So the electric utility,
because you know, you put them all together and it still doesn't represent the total demand of N
star, it has a smaller impact than if N Star were to join the project.
So if n star were join The Harvest Project,
it would have a significant decrease on rates than what they're currently forecasting today.
how the rubber meets the road is the same thing with the AKLNG pipeline, demand matters,
volume matters and same things with any infrastructure that we build. Volume matters.
I'm going to stop here. Any questions on this or are we going wait until the end?
You can see some of the things we are still in negotiations. This has not been set, so
we felt it was important to be honest and transparent about what we're looking at today,
obviously baked into that which is why you're seeing the prices increase, but
that point is still being negotiated. So there it is, that's where the rubber
meets the road. It's important to understand from my perspective based on
$4.6 million worth of studies over the last couple years, there is no project
and it's really important that we're honest about this with ratepayers.
LNG import that is going to reduce the cost of energy
There's no renewable project that it's going reduce. The cost
of Energy all of these things have to go on top of existing rates and
Utilities have gotten really
Very good at
Diverting right so you're gonna hear a lot about cost savings. Well, this is a cost-savings
Compared to what it would have been
I don't know what the rate impact is going to be.
Anytime you hear someone say, what's the cost savings,
flip that around and say what is the right impact?
Because the two answers can be very, very different.
And so, there's one project out there.
I know there is a lot of skepticism,
but there only one that has the potential
to reduce the costs of energy,
and that is AKLNG project in the full export model.
that's an important piece to understand this committee asked some very specific
questions so I wanted to make sure we address those the project description
which includes the import capacity this project is designed for 300 million a
day that is 109 BCF so we have significant room for growth here one of
I've been working at this utility for 20 years, 60 years in operation.
We are long-term planners.
You want to do something once because the moment you have to add on, expand, there's
an additional cost for turning dirt and for making modifications and making changes.
So if you the planning in place, you can reduce the cost of your customer by doing it the
first time.
A tank may cost $150 million today.
when NSTAR needs it. Those are important questions. That's why you do something all at once.
Because you can do it at one time, minimize cost. We look at things that we could have done
in the past. we had a project for SINGSA where we wanted to drill two additional wells.
We wanted add some dehydration, some compression. It got rejected by the commission.
We did the project the next year and the
project cost almost doubled just a couple years later.
So we are very good at planning, we're very
good for casting impacts to rates and that's why
we have one of the lowest distribution costs
in the nation.
Full stop.
Do things early so you can take advantage of
the costs.
Storage,
we've talked a lot about storage.
We're currently looking at the FSRU
version option to build an LNG tank on a
facility there.
That's part of the discussion part the negotiation. We'll see what the best cost is for customers and whether or not operationally we can manage as it's designed
I
Think we've touched on this before number three
The assessment of our project's ability to meet all the railbelts needs. Yes, it can no question full stop
pretty easily
How would this function presuming there's not a gas line developed?
This would maintain its operational status as an import facility.
The difference is we've got a long-term contract spreading those rates out over time,
so the impact again to customers is less with the optionality if it comes along
to switch over to the AKLNG project.
You look at the forecast on question number five with declining production with this project
We're anticipating and based on some contracts, we've seen we're
anticipating that the gas demand we met through 2029, M.E.A. just made an
announcement here that they've extended their contract with Hill Corp, which
we are extremely supportive of. So we believe this project can come online if
necessary. If a gas line is developed, how would this
project integrate, respond? This goes back to the what happens to
you've got a half a billion dollar investment that requires long-term contracts and a certain
amount of debt, right? Somebody's providing that debt. So the pipeline project, again,
commercial flexibility could come in, take on that date so that we don't continue to have that
terminal cost going out for 30 years. It's taken on by the LNG, AKLNG project that then turns into
costs that are borne by those exporting. Right away, once that happens, the costs are eliminated
Which is a benefit that flexibility does not exist in the other option, which is the harvest option
Which again is why we chose this
One last thing on this slide
This picture was taken by a service tech of ours
And I want to make sure he gets credit for in case he's watching beautiful picture that we use all the time now
So
Thank you again for the opportunity. I went through that relatively quick
So that you know, hopefully we can get some questions from from the committee
Yeah, very good. Well, let's start off with any clarifying questions, specifically with Mr. Sims and end star, and then we're going to bring back up Mr Klossa and have some continued discussion. But I had co-chair mirrors first and a representative rougher to get you next to the queue.
Thank you, the chair, just clarifies points on the previous slide.
Just for clarification, you floating storage unit.
Yes, thank you.
And I didn't pull out my calculator to do the math,
but in box number one, up to 300 MMCFD conversion
for how much for a year.
Through the chair, Representative Mears,
that is 109 BCF per year is what that brings on.
Thank you.
I'm sure you do that math more often than I do.
And despite being an engineer off and off
Good there
I'm all set. Yes, okay good, and then
Representative cop ahead you in the queue also the reference reference a reference go ahead. Yeah, thank you. Mr. Sims. Thanks for being here today
I
Guess I want to go back to the very first title slide the one that you said this maybe not aptly named
Describe to me you've said you are the customer. So
I'm assuming NSTAR is not putting up the capital for this project and then, but you're here doing the presentation.
Walk me through that.
Yeah, through the chair representative reference, just a great question.
NSPAR's putting in $0 to this Project.
What we are working on with Glenfarn is a gas sales agreement.
Again, going back to the role of the commission, we feel it's critical and important that the Commission play a role in this.
So, we will be filing it with the concept that they have
ultimate authority to approve or reject it because that is a
critical component to all of this.
I was asked to present, so I am here.
I think Glenn Farron, if they wanted to talk about this, they
would be happy to.
Probably more apt to talk about this from a decision-making perspective on why we chose this as opposed to some of the other options out there
So I think that's helpful for this committee to understand
and
They wouldn't have been able to release those prices without my authority
I
Think it's important that people see what the potential rates are
Just a couple follow-up
Thanks, so by saying
We chose, this
Essentially saying
there was maybe a couple of different options presented to you as a customer.
And you chose this option as the customer, uh, I think that's,
and I understanding that correctly through the chair representative
reference. That is absolutely correct. Okay. Um, so as
a, um, is this potential infrastructure?
Is this what Glenfarn is producing in their,
uh presentation says.
Part of phase two is what they call it, or something separate.
Through the chair representative reference.
So I think these two projects are working concurrently.
So when they talk about phase one, phase
two, they are strictly talking about the AKL and G export project.
You don't hear a lot in the public about
the import project, and so that is not considered as part of the phase
if the project goes forward and we you know decide to enter into an agreement with them and they
start building the import facility and phase two absolutely would be a part of that project
where it would would it be taking on that debt acquiring the existing infrastructure that had
been built and turning it around. Final question Mr. Chair so moving forward to slide five which
Again, everything is in flux, but some of the estimates that I've seen for initial supply
of domestic gas from a pipeline are more than these dollars on this screen.
So let's say we build a pipe line.
To import it through the chair representative reference. I think that's a great question
And there's no doubt
Pipeline gas if it's just Alaska customers using it it will be more expensive than the final product
At that point it really comes down to commercial negotiations. We're still in that process
my desire and my
Sort of mission in all this is long-term reliable
gas supply at the cheapest cost possible. So the contracts that we're looking to enter into will
provide that opportunity for Alaskans. If you look at
the trajectory of the LNG import, it starts out at 1450, 1480, but it's gradually going up,
right? And so, again, that's about long-term reliability. We have made a lot of decisions
utilities and even at the commission level that have looked at rates from a
short-term perspective and particularly I can remember 2006 when the
commission rejected a number of contracts that we had negotiated for
long- term gas supplies and in the short term they absolutely would have
It turns out it would have reduced the cost over the long-term by billions.
And so, we need to be careful about looking at short- term ramifications, and we should
always be thinking about what is the Long-Term Objective for the state of Alaska and for
customers.
And ours is always over-the-long term, what does the trajectory of rates?
Well, that brings me to one final follow-up.
Okay, follow up.
I have bad habits.
You mentioned a half a billion dollars a couple of times in your presentation.
Is that what you think it costs to build this, or is that a better question for Glenfarn?
In my reading about these projects, it seemed like the GlenFarn option was quite a bit more
Yeah, so you have an estimate through through the chair representative reference. So if you go on to our website, we actually
Posted our phase one study that we worked with with BRG and that does show
Our option that. We've selected as a higher cost
Um, the ability to spread that out over longer-term contracts is important
Um but I think I Think it's fair to say that if we were to look at the harvest project
um
As it would need to be expanded for n-star
and the Glenfarn project, as we're looking at today,
it's probably a little bit more expensive.
Okay, thank you.
Yeah.
Okay. I've got a couple of people in the queue.
Representative Copp, were you still?
Sure. Yes.
Yeah, Mr. Sams,
thank for that eloquent presentation, sir.
It's nice to have things laid out in a way
that the legislature can understand it,
never underestimate our ignorance, I appreciate it.
Question, can you walk us through again the how the two projects differ, the Glenfarn project,
and the Harvest project and how they impact the rate pair. You likened it to a mortgage and being
Soften the the rate shock so to speak. Can you just walk us through that and how those two projects are different and
How they're able to do that?
Yes through the chair represent cop. Thank you for that question
I'm gonna I'll stay on this slide because I think that helps
Highlight what would happen and and why we view it as important?
The project that we've selected so you've got I mean I say similar
Capital costs for either project and you know admittedly on our
report. One was higher than the other. I don't think substantial is fair, but I
think definitely one was
higher then the
other and the report that we submitted. What's important is the long-term
flexibility. So when you think about entering into a half a billion dollar
contract with infrastructure particularly, you are required
or it makes sense from a utilities perspective to enter into a long-term contract to spread those
costs out. And so I don't know what the costs would be for harvest, but let's just look at
the Glenfarn option and pick whatever year you want. Let's look, at 2034. So you've got
$2.82. That is the cost that is going to be born, and N-Star will have to commit to
that we buy, whether we're buying it from import or not, right? So that $2.82 is we are always going
to be paying that because we have to meet our contract commitments. So we've contracted with
an infrastructure company to build something and they need to get paid. That's what we
are committing to do. The key difference and distinction is with NSTAR's contract with Glenn
in the harvest scenario that they have no ability, right?
Because they're not developing the AKLNG pipeline
coming down so commercially,
the customer is still gonna be required to pay that
as the export project is sending gas out the door,
if that makes sense.
So from a long-term perspective,
I wanna make sure that we're taking advantage
of AK LNG resources.
If it's built, it might not be,
I don't want to have to continue to pay a cost that's unnecessary.
And that is a stranded asset.
The harvest facility becomes a standard asset for me utility perspective.
I'm paying for that, but I no longer need it.
So that that why that commercial flexibility and commercial potential is really important
to end star.
And it's the long term view.
I could take the view that short term, yes, that
But if I want to take advantage of five-dollar gas when that pipeline comes down and just for the record
I am a supporter and I'm bullish about that project. So
If I wanna take advance of that five dollar gas coming down the pipeline at the fullest extent
This is the path that I chose and i think it makes the most sense
Thank you. Okay, thank you
I want to just kind of put a pin in that because I'd like to get mr.
Colossa to come up here in just a second to probably respond or
Contribute some more information to that question. So that's not lost on me that there's probably more to the discussion
We just had but I do want
To finish up any clarifying questions for mister sims and instar so representative Costello. Did you have a comment two questions?
Thank You
Mr. Sim, thank you for being here.
It's good to see you.
If FERC is the one, the entity that's approving the facilities,
then is it true that it's really not up to you?
Which project comes to fruition?
Through the Chair, Representative Castell,
I think that is a great question.
You know, I thing the FERC absolutely could take a look
at both projects, let's say they're filed at the same time,
and say which one makes the most sense.
You know, they are ultimately the regulator on which import project goes in and out or, you know
Which one advances they could also say there's a need for both
I don't know if that's likely, but that is a possible situation. So, yeah, it's great question. That should be asked. Yeah
And thank you for being here and aside from being hear and in your website
What are you doing to?
Educate the rate pair about the landscape that we're now looking at here
Yeah, through the chair of Rep. Sam Costello. Great question. So
the winter time is kind of when the you know the the flurry of trade associations and and those types of meetings start
So we've already been asked actually this morning
Hey, can you give the same presentation that you're planning on giving the house energy to our group?
And so that that's the process that we're going to be going through
If you look at the time last year, it was probably too early. We didn't have a lot of these
kind-of finer points nailed down
So, there's, you try to thread the needle on informing the public with reasonable outcomes
versus just sort of informing public.
But we have been presenting that BRG report and the information behind it on what the capital
costs are going to be and likely potential of rates since 2024.
So we are very active and I think it's critical, especially now, as we look at what's coming.
in 2033 to be very honest about what rates are going to
be. There is no silver bullet. We are
going have cost increases full stop.
I don't question.
Okay, follow-up.
Thank you, Mr. Chair.
Appreciate it.
In terms of your application before the RCA and the additional storage and things, how
much storage are you asking for and what is your timeline for when that docket is before
you and if you know, and then also once you're there before R CA, do you have the flexibility
to engage in discussions that go beyond just your request for additional
Through the chair of represent Costello, so we filed that on January 12th. We asked for an expedite consideration of 45 days
What we have asked, for is not
The recovery of rates
We have ask for a predetermination of prudency so yes and star it makes sense to go forward with this storage project
Once it's built if we get approval from the commission, then we will
Go through the rate application process. We'll file what the final costs were with the commission and they'll be able to say
Okay, this was prudent. This was not prudent and walk through that full rate process
As far as getting it online
There are a number of things that we're working on so, you know DNR obviously plays a critical role AOGCC plays
a Critical Role other number releases we have to get and then
Project procurement, so okay good call up. So so it was my understanding that this was capacity that existed now that you wanted access to but now it sounds like this is you are you
Are building out additional capacity
Through the chair, yes, sorry, I didn't answer your question representative Costello.
So this is a brand new storage facility.
It has the capacity for working gas, which is the gas that we can actually move in and out of about 17 BCF.
So you put that in addition to the 11 that you already have at SINGSA.
That's 28 additional BCI, a total of storage capacity.
provide significant deliverability that we will need,
not only for an LNG import scenario,
but also for a scenario where we're continuing
to utilize Cook Inlet Gas beyond 2033.
So this is required.
All right, thank you.
Anyway, you want to follow up on anything right now?
Just a quick one.
OK, representative Mears.
Thank you, just have a.
parallel question about FERC.
So Glenfern was in Juneau last week,
but I don't think this was discussed in any committee
or anything.
So my understanding is that is a modification
to a FARC license that already exists as well
to be able to do the import.
Are you able.
Coach Ramirez, that's my
understanding of what would have to happen for that project.
They're the project developer, so I'm going to defer all those questions to them. So we all understand that but we don't know
Well, mr. Koss if you'd like to come back up again
I am going exercise some privilege here though to kind of steer things in a couple
Directions initially as we begin some more discussion here. I want to first
go back to the balcony a little bit on this issue and then we'll come back in a
little more to project comparison that I know we kind of left open and I do
want to come also back the question about RCA could bring us in to bring
us together to talk and i want get to that so I kind got three things queued up
right now but the first point I want I'd like both of you to help me with this
was from my perception kind of the the top energy issue. We could talk about a
whole bunch of different things, but if we didn't get clear on a straight,
confident path to providing gas for the Cook Inlet Rail Belt area,
everything else didn' quite matter.
And we started asking a lot of questions,
and we got a lotta, this isn't that's,
and they can do this, and
we can't do that, confidentiality,
that provided a little obfuscation
in terms of what is really going on,
and do we have a direct path to giving
our rate payers and our residents
clear confidence that their homes are gonna stay warm,
and their lights are going to turn on.
So I'm trying to get clear,
and you, you know,
provided some information at the beginning of your presentation about this issue.
If we go back a year ago we saw some clear gas shortage concerns in 2027.
And more recently we've seen a couple presentations through DNR that suggest that primarily because
of the benefit of gas storage, we have now seen some new runway.
in the situation that combined with also success and drilling
suggests that we're in better shape than we were a year ago.
We have some confidence now in how to manage the gas we can produce,
how store it, and how manage its use.
And you've challenged that in terms of saying, you know,
things are a little more dire than that assertion that I started off
with suggesting that maybe we are in a better place.
But on the other hand, as you first,
Mr. Sims suggested that things are much more dire and you've called the governor and, you know, the sky is falling.
You also said in your presentation that you need gas in 2033.
So that, to me, kind of rolled out. Okay, well, that's seven years from now. That doesn't sound so bad.
And in the last slide you said you're anticipating your gas demand will be met until 2029, when this project is done.
So everything's okay.
So help us. Help me.
understand how do we get to clarity on what needs to happen,
who's going to get it done, and what role we can play,
if any, to make sure that our residents are going
to have gas or if there's something that needs
to happened that we know what it is and we
know how to makes sure it happens.
Because where I'm at today is I've kind of left once again
a year later with, we just don't know.
And we've got multiple projects spinning around.
And I don't know whether those multiple projects are a good thing.
I like competition.
I'm a capitalist or multiple project is going to leave us confused and not acting
because we're waiting for one project to happen because it's so big and glorious.
But maybe we'll do another project but then we've got a competing one because
we don t want to do that one, we ll do this one.
So I d like both of you to kind of help us understand.
What s the path forward here to get this job done?
co-chair Holland so there are a lot of complications with this challenge that we
have. You're starting off with my question. Well and and the the hardest one is that
all the utilities are on a different time frame. So you know if all of us had
gas supply under contract and we're confident that the producers were
going to meet their obligations.
We could all get behind one project, but I think what you heard a couple years ago. Maybe it was last year
In session when Chew Gatch made the announcement. They're going with harvest. There were going
with Harvest because
Our project couldn't come online until 2029 and they needed gas by 2028 and so when you start looking at these things that there are
entities that have an obligation to serve and then there our
other
developers of projects. Utilities have the obligation to serve, so we have to have
the resources in place, lined up, planned out so that we can minimize the impact to customers.
Sugatch has that same obligation. They have
to meet the needs of their customers, and their timeline is a lot more aggressive than ours is,
so they made the decision independently to go with harvest, which is not a bad decision for that
I think the question is, you know, again, they're very reliable operator.
They know what they are doing.
The question, is how do we, if we want to do what's in the best interest of the state
of Alaska, how did we get everybody on the same timeline?
And so I that's the biggest challenge that we have as a state is understanding those
Yes, to the chair, appreciate the question, you know, really for the last couple of years,
this has been very transparently stated, in terms of where gas supply is ultimately going
versus what the demand is.
The particulars may change, but I think the key thing is Mr. Sims indicated through his
testimony, decisions need to be made so that infrastructure can be built and that it can
be done efficiently for rate payers.
I think from our perspective, as indicated, lower capital cost and would welcome the opportunity
to have additional conversations with NSTAR, but ultimately we feel that this is the best,
the quickest, the most cost-efficient solution to address those near-term needs, and to make sure
that we provide the flexibility going forward. Different kinds of constructs or different lengths
And so we're really, we are here to make sure that we provide a solution.
We think we've got the best solution in place because of the existing infrastructure that
we can re-utilize and we ready to address those challenges.
Thank you, Representative Harris.
Thank You through the chair.
So, thinking about when we need things, there's a DNR presentation of resources on Friday
that runway looks a little different than we thought a couple years ago, but also understanding
some of these real supply challenges. The floating storage unit brought up that old chest note
that of the floating recastification units. And since demands start small, to begin with
take their timelines later is there's what is the practicality and you know potential costs of
bringing in a smaller temporary solution like that if we do get way laid with a
a larger construction project and start sure yeah you to the chair for us we haven't looked at
some of those more recently we really believe that again with our brownfield construction
that the opportunity we have to be able to bring this online within the timeline can be very easily
managed. Our scope is not as significant as a full greenfield project, so we feel that we can
manage it within that timeline very effectively. Coach Amir is just really quick. One of the
biggest challenges again going back to the timing is it's a really hard decision and
You know, the moment you make the decision to go with imports, you've essentially killed
a cookie on that market from a production perspective.
And so we have really tried to work with the producers that are existing there, Bluecrest
we understand the importance that has on the Kenai Peninsula, just from that perspective.
And so this is one of the challenges, we know that there's more production there than we had a
couple of years ago. So some of things that we're doing, they're working, the challenge is,
there is no producer today, as I mentioned, that can meet the long-term needs when it gets to the
This market to exist we want it to exists as long as possible. We're trying to extend contracts
So that it can exist for the longest time possible, but the ultimate reality is at some point
It's just not going to meet the market needs and we need to address that
Thank you, sir, Mr
So I'm just a clarify. I mean are there sort of small little options that might be able to carry through
I know I'm sure that you've looked at a lot of that work through the chair co-chair mirrors
We're trying to we're, trying, to fill some of the gaps that we see
For example in 2026
But also when you talk about timing
You know me a was able to get a one-year extension for for BCF of gas
I think it was our six BC F for their utility, but then after
2029, they have no gas under contract. So what can we do with Cook Inlet Gas to maybe meet that
need? Homer Electric still has needs. Chewgatch Electric as we know, and we've talked about still
has need in 20 29 2030. Is there a way we can leverage Cook inlet production to get to where
everybody's on the same timeline of 2033? It then makes this decision a lot easier and a
Can the producers reliably deliver what they commit to?
So meaning, can we get a firm contract
that we can actually bank on?
Right now, they're not willing to do that.
We've got interruptable contracts.
Can we the storage in place that's
going to be critical for the cook-inlet market
so we could pre-buy some of that gas,
put it into storage, and use it in later years?
We're trying to all those things.
But at some point, we might just have to say
we need to go with the imported solution.
Representative Ruffridge
Thank you, Chair Holland. Sorry. I I had an initial question and then and you started talking and I have a whole bunch of other questions
I want to get to a math question, but first you said something that I don't understand
You said once you go to imports you have killed the cook in that gas market
I Don't Understand that statement
Imports seem to be at a higher cost than having gas produced in the cook-and-let basin
From what I can tell the price of that gas producing the cooking-that-basin is still going to
Be lower than imports. How do we how do? We kill the Cook-And-Let market with an import of gas
Through the chair represent a rough Ridge if you're looking to invest
And the producers are putting significant dollars into their assets and into the planning
for future years.
If we build an import facility, volume matters.
And so there may be some pricing that we can do with producers where we say, okay, we're
on the hook for that $2.80 regardless of what we do now.
What you would be receiving normally minus two dollars and eighty cents to make it on par
So it's just it is a tough decision for a producer to say okay
I know my market is getting smaller because now there's imports
I
Know the value that I'm getting for this gas has now gotten smaller
Because they're paying for the infrastructure anyway, so do I continue to Make that investment or I'd put it someplace else
I think that's a real risk
Well, you brought up the two dollars and eighty cents
So I just need to go through a little bit of math in my own head because I think I'm doing it right
But to represent of mirrors this point. I got a check. So
On slide five of your presentation. That's the $2.80 terminal fee. It's estimated per MCF
So yeah, that's dependent on the volumes that are going through the terminal. Okay, so let's
Just do quick, easy math.
Let's say we have to import 60 BCF at some point.
Please help me understand, because I'm not a gas guy.
I think I know the answer.
How many MCF are in 60BCF?
Well, you could back that out.
I don't have a calculator.
But take the 60 BCF and divide it by the 365,
and that'll get you your.
Daily volume that's going through there. That's based on the numbers that are presented or based
on that daily volume
So that how weak that is how we backed into that and I'm okay at math
I am not that good where I can do that one in my head
So I just asking for a simple conversion and and there's one one reason
I' m trying to figure out if you're charging two dollars and eighty two cents estimated per MCF
how much does that generate in dollars for a terminal fee per year?
I don't know off the top of my head. I mean ultimately what's that what that's doing
is that is recovering the cost plus rate of return over a certain period.
Okay my math showed me and this is why I want to make sure I'm right and not wrong
that it's a few hundred million a year in term of a fee.
That is pretty close. So
What we pay hillcorp today is over 250 million a year today
What, we, pay fury per month last month is about ten million dollars a month so
The cost of gas is expensive
But this is not the cost sorry through the chair this, is, not, the, cost, of, gas i'm talking, about this was the terminal fee
offsetting the cost of the investment.
The cost to the commodity infrastructure, excuse me,
yeah, through the chair, represent reference, the
cost the commodities that we pay today is the
infrastructure cost that the producers are putting
in. So they're investing dollars into wells and
compression and all those things.
So it is a recovery of their investment that they've
made.
So sorry, one more follow up to that because the
The investment that's happening from a producer perspective is the constant hunt for gas.
If you build a piece of infrastructure, that has a fixed cost and you don't have to go find it anymore.
So wouldn't logic say that once you pay off the infrastructure the terminal fee should go away?
And if it's a couple hundred million a year, wouldnít you
pay your infrastructure in a short period of time because you're not searching for new wells?
through the chair representative reference.
So this is how the financing aspect works.
When you buy a home, for example,
the interest that you're paying,
over time can sometimes be more than the actual principal.
So you see how that principal works down at a very, very small
and unfortunate and frustrating amount.
per year as you pay that off.
So it's a similar concept.
You've got the cost of debt,
you've the costs of the return,
all those things factor in
to what's ultimately called the revenue requirement.
Now we're really getting into the weeds here.
I was just saying, I'm right making.
Brian, finish up here and move on a little bit.
So go ahead and finish your comments here,
but we are getting a bit deep here?
What you're seeing there is essentially
the constant interest and inflation
and all of those thing tight into it.
And the best example I can give is that of a mortgage
where you are not actually working off the principle
significantly over time.
Okay. Thanks.
You have a follow-up on that.
Actually, let me pause here and ask Mr. Klossa.
Just in fairness, you want to weigh in on this issue.
I don't want get too deep into the calculations
and the conversions of MCS as to BCS.
But we're talking fundamentally, I think, about an issue
that's important between the two projects to understand
what's going on, so any comment you wanna make
or just to keep this level.
Yeah, to the chair, I'm an engineer, so I enjoy these kinds of conversations, but no,
I think, you know,
I'll restate a couple of things that we have said throughout.
You know our ability to bring on LNG imports quickly at the lowest capital,
lowest impact to rate payers, we stand ready to do that.
Okay, thank you for that,
Just do comments one I appreciate everything that Hillcore has done to
develop and find gas and bring more gas online for the state. Secondly I
recognize that Mr. Sims comment about possibly killing the gas exploration
industry in Cook Inlet is well taken. Someone who grew up there.
You're also talking about the jobs that labor the workforce that work for all those companies that do exploration
You are giving up hope that what the geologists say is that there's a TCF out there that we can still find and
You kind of putting up the white flag
And you're saying we're done with that part of the industry
And so it is a sea change and I recognize Mr. Sims what you were saying
It's an absolute sea-change to the community to The workforce
and it's just a different model, but it is a profound change, and
it will affect hundreds of families, so I appreciate you saying that.
Great.
Thanks.
I would like to come back to the observation that Mr. Simms made, that perhaps there is
an opportunity for the RCA to bring all the players into the room, perhaps a white padded.
room with no windows but nonetheless to you know encourage some more direct communications to work out some of these differences and I'm
wondering if if chair Espindola or Commissioner de Riz is still online or available if you might respond to
I am not sure if that would be an invitation or a suggestion to the role that RCA might play in helping us
Move along with some of the decisions and this process to bring more clarity to the projects and some
decisiveness to
What needs to happen are either views still on and able to respond to that?
Through the chair co-chair Holland, this is Chair Espindola from the RCA
Yes, we are we have a public meeting tomorrow, and I will definitely bring this topic up for discussion amongst those commissioners
Thank you for that anything mr. Simpson's cost you'd like to
Suggest while it sounds like maybe you have the the ear right now of the chair in terms of that conversation and discussion
It might happen tomorrow that you would like frame in
Terms of what might happened if you were to get people together
Coach air Holland
So I think what's really important is you know and you harvest referenced it as far as clarity on the regulatory process
Um, they will have to submit something in front of the commission in order for utilities
to recover that cost and rates, like full stop, right?
That has to happen.
Regardless of what happens on the permitting side, on
the FERC side in
order
for a utility to
recover costs and
rates.
They have
to get something approved by the
commission.
And so clarity on this
is a really critical point.
And that's why I think both Two Gatch and NSTAR
are very interested in not necessarily
a decision-making process,
because I thing as they highlighted,
they can't necessarily do that
unless there's been a filing,
but for them to get an understanding,
a foundation of what is being considered by the utilities,
I thinks is really important.
And so that could help them inform their decisions
as their presented with these filings.
It's important to put us all in the same room, understand demand,
understand the potential supply,
understand that you have a very reliable operator who's presenting a
very good project. Is it the right one or is the one
that NSTAR is proposing, which is similar, has a more long-term view and
more bullish view of the state of Alaska and maximizing Alaska resources?
What do we want to do as a state? And so that's, I think, a critical
and one that the Commission could help guide.
Again, it's not necessarily a ruling
that could come from that,
but they could have a foundation.
Mr. Kloss, any thoughts on what you'd like to see
from the RCA in a potential discussion
that would be helpful to the decisions that are ahead of us?
To the Chair, I will say this.
Again I think that our project does offer
a lot of different flexibilities,
even as additional production may come online.
But at the end of the day, we need our customers to be able to have their contracts approved.
And so we support anything that gives them clarity so that we can move forward.
Okay, very good.
Other questions?
Yep, Mr. Sims.
Thank you, co-chair.
Just wanted to offer up one more opportunity for not just this committee,
but for any legislators that are listening or are going to
be listening and start as happy to sit down.
And I would bring some experts who actually know those numbers a little bit better than I do.
I represent a reference so you can get some answers to those questions.
But I think that's really important to understand the numbers that are being presented,
why they're at the cost that they are, and our staff and myself were happy to meet
with any legislators individually and walk you through the number on how those are calculated.
to bring up in the couple minutes we have left kind of the elephant in
the room which is a pipeline project and i'm wondering if
you know the two of you might give us some
thoughts on your view of this project
and how it's moving ahead what steps may still be
in store in terms of RCA approvals necessary
for those contracts because this project keeps both
being exciting, attractive, but it also keeps getting
in the way of getting other projects to move ahead
because some of these things don't make sense.
There's a big pipeline and it's gonna make gas.
a couple of years. I'd appreciate any perspective the two of you have on where
are we, what will help move this forward so that we don't find ourselves just
spinning around waiting for another decision that comes another year later
and we've not made any more progress. So if you want to start first? Sure, yeah,
to the chair, again, our LNG import project we feel is very compatible with
a gas line being developed. We don t think it precludes it at all.
We are not participating in any aspect of the gas line as a
harvest entity.
Right.
Thank you for that.
Mr.
Simms.
Anything you want to add?
Uh, co-chair Holland.
So, uh, and stars in the mill negotiations with Glenn
Farne.
Uh I think that was publicized and announced.
Uh we are working on an umbrella agreement.
Um, so that has sort of key terms, definitions, Uh and then
concurrently negotiating two agreements underneath that
One is the LNG import project and the other is
the pipeline project.
And so our intent is to file that with the commission
as a gas sales agreement.
Again, we think it's important that the Commission approve.
What I believe is a decision that shouldn't just
be made by John Sims, but should be
made from the state.
And it allows the flexibility and commercial, let's say,
eloquence to transition from one project to another.
And I'll say it again, the AKLNG project
project that has the potential to reduce the cost of energy. Full stop.
Okay, thanks. So this kind of brings us full circle. And I'm curious if, again,
Chair Espandola might weigh in on this. As I understand the discussions about gas supply
public convenience, as well as potentially some gas contracts
language approved by RCA.
And I'm trying to understand where that is at,
and how does that interface and with these LNG import
discussions going on, and
how has this come together at the R CA in terms of there being
a rational, cohesive look at these decisions versus sticking all of them
not seeing those made. So I'm wondering, Chair Espindol, if you've got any thoughts on how you'll
manage this process of these different discussions and, you know, how do you get to a certificate of
public convenience when you have these other projects that is, in essence, provide the
supply of gas that would seem to make the two incompatible, and yet we want something to move
Yeah, for the record, John Espandola, RCA, do the co-chair Holland.
So I'm actually going to defer back to Mr. Sims.
I think he just spoke to the mechanism that this filing would come before us.
And I don't want to speak for Mr Sims, but I understood him to say that N-Star would be
filing a gas sales agreement that would capture the both phases, phase one and phase two of
the AKLNG pipeline.
Okay, anything further on that? Any other questions?
All right. Well, thank you, mr. Sims much class. Thank you for joining us today and braving the weathered
if that affected your travels. I wish you safe travels getting home and thank You again for being here and to
Chair Espadola and commissioner Derese if you're still there, Thank You for Joining us online at this point
So thank you for all of this time we've had and the questions we need to conclude a presentation the House Energy Committee will
Meet this coming Thursday January 29th. There we'll hear
introductions of House Bill 252 and House bill 259
On Tuesday February 3rd. We'll be holding public testimony for a joint resolution
27 that we heard in our last meeting we are
making an amendment deadline for House Joint Resolution 27 for Monday, February 2nd at noon.
And we'll follow up with some communication to everybody on the committee just reiterating those dates and that schedule.
And therefore, seeing no further business before the Committee, this meeting is adjourned at 2.57 p.m. Thank you.