Session: State Capitol, Room 427 Juneau, AK 99801-1182 Phone: (907) 465-2828 Fax: (907) 465-4779 Interim: 35477 Kenai Spur Highway, Suite 101 B Soldotna, AK 99669 Phone: (907) 260-3041 Fax: (907) 260-3044 345 W. Sterling Highway, Suite 102 Homer, AK 99603 Phone: (907) 235-0690 Fax: (907) 235-4008

Sponsor Statement for SB 360
Alaska Natural Gas Project Act

An Act establishing additional requirements for the consideration of applications under the Right-of-Way Leasing Act for an Alaska North Slope natural gas project, authorizing expeditious priority treatment of all applications under that Act and under other relevant state laws for issuance of a right-of-way lease for that project, authorizing the commissioner of natural resources to act to modify the terms of certain state oil and gas leases related to the project and to act, with legislative approval, to waive, reduce, or defer the collection of royalties due the state, and authorizing the commissioner of revenue to act, with legislative approval, to waive, reduce, or defer the levy and collection of taxes by the state and municipalities under the oil and gas exploration, production, and pipeline transportation property tax related to the project, authorizing the Alaska Railroad Corporation to provide financing for the acquisition, construction, improvement, maintenance, equipping, operation, or expansion of the project and related facilities for the transportation of natural gas within and outside the state by others and the corporation's issuance of its bonds to finance the project and facilities, and limiting consideration of judicial challenges to decisions made with respect to that project under this Act; and providing for an effective date.

SB 360 seeks to expedite the construction and operation of an Alaska gas line from the North Slope south through Canada to the lower 48 or to Alaska tidewater for shipment as LNG ("project"). It provides fiscal incentives and permitting benefits to those project sponsors who are willing to work with the State of Alaska to ensure: (1) opportunities for employment of Alaskans and Alaskan businesses are maximized; (2) potential in-state demand for gas from the project can be satisfied; and (3) competition in the exploration and development of northern Alaska gas is promoted.

Currently, a project sponsor for a pipeline Right-of-Way (ROW) lease to construct a pipeline from the North Slope can proceed under the provisions of the Alaska Pipeline Right-of-Way Leasing Act. However, those provisions and other provisions of Alaska law will be modified for a sponsor who agrees to do the following:

1. Train and hire Alaskans and use Alaska businesses in the construction and operation of the Project consistent with constitutional provisions.
2. Complete a study on in-state demand and submit a plan that must be approved by the RCA to meet that demand.
3. Complete a study on natural gas resources in northern Alaska and submit a plan that must be approved by the RCA to maximize access to the Project so that competition in the Alaska oil and gas industry is promoted.
4. Update those demand and resources studies ten years after construction of the Project starts.
5. Agree to provisions in the ROW lease providing for in-state use of royalty gas and expansion of the Project.

If a project sponsor gets certifications from the appropriate agencies that the sponsor will or has done all of the above, the sponsor gets the following expeditious treatment in obtaining authorizations to construct and operate the Project:

1. The Project may be phased under both the ROW leasing act and the Coastal Zone Management act.
2. All agencies must give full cooperation to the DNR commissioner on Project matters by providing information and by issuing any necessary authorizations at the earliest practicable date, on an expedited basis, and with precedence over any like matter pending before the agency.
3. Any authorization may be amended as necessary to further the purposes of the Act.
4. If the governor finds a provision of law that impedes the Project, he may propose a waiver of law.
5. Any decisions by the commissioner and other agencies shall be subject to limited judicial review only and such claims must be brought within 60 days.
6. The DOR commissioner may waive, reduce, or defer all or a portion of the property tax payments relating to the project and the DNR commissioner can do the same for the royalty payments. The commissioners can only offer these incentives if;
1. the project would not otherwise be economically feasible,
2. an agreement is made to begin construction by a certain date, and
3. the legislature approves.
7. The Alaska Railroad Corporation may provide tax exempt financing for the project

Any project sponsor can proceed to apply for a ROW lease under the current Alaska Pipeline Right-of-Way Leasing Act without obtaining the certificates outlined in this bill. They will not, however, be eligible for any of the incentives this legislation offers.

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