ALASKA NATURAL GAS PIPELINE STATUS REPORT HEARING BEFORE THE SUBCOMMITTEE ON ENERGY AND AIR QUALITY OF THE COMMITTEE ON ENERGY AND COMMERCE HOUSE OF REPRESENTATIVES ONE HUNDRED EIGHTH CONGRESS SECOND SESSION MAY 5, 2004 Serial No. 108–82 Printed for the use of the Committee on Energy and Commerce ( Available via the World Wide Web: http://www.access.gpo.gov/congress/house U.S. GOVERNMENT PRINTING OFFICE 93–978PDF WASHINGTON : 2004 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001 VerDate 11-MAY-2000 11:33 Aug 06, 2004 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 93978.TXT HCOM1 PsN: HCOM1 COMMITTEE ON ENERGY AND COMMERCE JOE BARTON, Texas, Chairman W.J. ‘‘BILLY’’ TAUZIN, Louisiana JOHN D. DINGELL, Michigan RALPH M. HALL, Texas Ranking Member MICHAEL BILIRAKIS, Florida HENRY A. WAXMAN, California FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts CLIFF STEARNS, Florida RICK BOUCHER, Virginia PAUL E. GILLMOR, Ohio EDOLPHUS TOWNS, New York JAMES C. GREENWOOD, Pennsylvania FRANK PALLONE, Jr., New Jersey CHRISTOPHER COX, California SHERROD BROWN, Ohio NATHAN DEAL, Georgia BART GORDON, Tennessee RICHARD BURR, North Carolina PETER DEUTSCH, Florida ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois CHARLIE NORWOOD, Georgia ANNA G. ESHOO, California BARBARA CUBIN, Wyoming BART STUPAK, Michigan JOHN SHIMKUS, Illinois ELIOT L. ENGEL, New York HEATHER WILSON, New Mexico ALBERT R. WYNN, Maryland JOHN B. SHADEGG, Arizona GENE GREEN, Texas CHARLES W. ‘‘CHIP’’ PICKERING, KAREN MCCARTHY, Missouri Mississippi, Vice Chairman TED STRICKLAND, Ohio VITO FOSSELLA, New York DIANA DEGETTE, Colorado STEVE BUYER, Indiana LOIS CAPPS, California GEORGE RADANOVICH, California MICHAEL F. DOYLE, Pennsylvania CHARLES F. BASS, New Hampshire CHRISTOPHER JOHN, Louisiana JOSEPH R. PITTS, Pennsylvania TOM ALLEN, Maine MARY BONO, California JIM DAVIS, Florida GREG WALDEN, Oregon JANICE D. SCHAKOWSKY, Illinois LEE TERRY, Nebraska HILDA L. SOLIS, California MIKE FERGUSON, New Jersey CHARLES A. GONZALEZ, Texas MIKE ROGERS, Michigan DARRELL E. ISSA, California C.L. ‘‘BUTCH’’ OTTER, Idaho JOHN SULLIVAN, Oklahoma BUD ALBRIGHT, Staff Director JAMES D. BARNETTE, General Counsel REID P.F. STUNTZ, Minority Staff Director and Chief Counsel SUBCOMMITTEE ON ENERGY AND AIR QUALITY RALPH M. HALL, Texas, Chairman CHRISTOPHER COX, California RICK BOUCHER, Virginia RICHARD BURR, North Carolina (Ranking Member) ED WHITFIELD, Kentucky TOM ALLEN, Maine CHARLIE NORWOOD, Georgia HENRY A. WAXMAN, California JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts Vice Chairman FRANK PALLONE, Jr., New Jersey HEATHER WILSON, New Mexico SHERROD BROWN, Ohio JOHN B. SHADEGG, Arizona ALBERT R. WYNN, Maryland CHARLES W. ‘‘CHIP’’ PICKERING, GENE GREEN, Texas Mississippi KAREN MCCARTHY, Missouri VITO FOSSELLA, New York TED STRICKLAND, Ohio GEORGE RADANOVICH, California LOIS CAPPS, California MARY BONO, California MIKE DOYLE, Pennsylvania GREG WALDEN, Oregon CHRIS JOHN, Louisiana MIKE ROGERS, Michigan JIM DAVIS, Florida DARRELL E. ISSA, California JOHN D. DINGELL, Michigan, C.L. ‘‘BUTCH’’ OTTER, Idaho (Ex Officio) JOHN SULLIVAN, Oklahoma JOE BARTON, Texas, (Ex Officio) (II) VerDate 11-MAY-2000 11:33 Aug 06, 2004 Jkt 000000 PO 00000 Frm 00002 Fmt 6011 Sfmt 0486 93978.TXT HCOM1 PsN: HCOM1 C O N T E N T S Page Testimony of: Carruthers, John, Vice President, Upstream Development of Enbridge Pipelines, Inc ................................................................................................. 40 Konrad, Ken J., Senior Vice President, Alaska Gas BP Alaska ................... 45 McConaghy, Dennis, Executive Vice President, Gas Development Trans- canada Corporation ....................................................................................... 32 Murkowski, Hon. Lisa, a United States Senator from the State of Alaska . 6 Wood, Hon. Patrick, III, Chairman, Federal Energy Regulatory Commis- sion ................................................................................................................. 19 Additional material submitted for the record: American Chemistry Council, prepared statement of ................................... 60 Interstate Natural Gas Association of America, letter dated May 28, 2004 to Hon. Joe Barton and Hon. Ralph M. Hall ..................................... 62 (III) VerDate 11-MAY-2000 11:33 Aug 06, 2004 Jkt 000000 PO 00000 Frm 00003 Fmt 0486 Sfmt 0486 93978.TXT HCOM1 PsN: HCOM1 VerDate 11-MAY-2000 11:33 Aug 06, 2004 Jkt 000000 PO 00000 Frm 00004 Fmt 0486 Sfmt 0486 93978.TXT HCOM1 PsN: HCOM1 ALASKA NATURAL GAS PIPELINE STATUS REPORT WEDNESDAY, MAY 5, 2004 HOUSE OF REPRESENTATIVES, COMMITTEE ON ENERGY AND COMMERCE, SUBCOMMITTEE ON ENERGY AND AIR QUALITY, Washington, DC. The subcommittee met, pursuant to notice, at 10 a.m., in room 2322, Rayburn House Office Building, Hon. Ralph M. Hall (chair- man) presiding. Members present: Representatives Hall, Whitfield, Shimkus, Walden, Rogers, Issa, Otter, Barton (ex officio), Boucher, Allen, Wynn, Green, McCarthy, Strickland, and Dingell (ex officio). Staff present: Mark Menezes, majority counsel; Bill Cooper, ma- jority counsel; Peter Kielty, legislative clerk; Sue Sheridan, minor- ity counsel; and Bruce Harris, minority counsel. Mr. HALL. All right. I thank everyone for coming to the hearing on the Alaska Natural Gas Pipeline, and I especially want to thank the panelist for her time, her very valuable time, and being punc- tual and being right here. And I understand if you are in a bind, we will go ahead and hear you now. If not, we will get the opening statements behind us. I know you hate not to get to hear the opening statements. If you will bear with us. The subcommittee will come to order. And without objection, the subcommittee will proceed pursuant to Committee Rule 4E. So or- dered. The Chair recognizes himself for an opening statement. The people of the United States are demanding an ever increas- ing amount of natural gas. Americans use roughly 62 billion cubic feet of natural gas everyday. Natural gas is the fuel of choice be- cause it is clean burning and environmentally friendly. The prob- lem is we are not producing enough natural gas to be self-suffi- cient. So the question is how do we solve that problem? Many oil and gas experts will say that there are no more giant oil and natural gas fields left to be discovered. That may be true in the Lower 48, however Alaska’s North Slope has over 30 trillion cubic feet of proven gas reserves. If a pipeline is built, it could de- liver as much as 4 to 6 billion cubic feet of natural gas per day. We have to figure out how to get it here. The development of the infrastructure would do several things. It will require major investments first and the shouldering of a lot of major risk by those that build the pipeline from Alaska to the Lower 48. Of course, for the past two Congresses we have worked (1) VerDate 11-MAY-2000 11:33 Aug 06, 2004 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 93978.TXT HCOM1 PsN: HCOM1 2 on that and we have tried to pass legislation that would encourage the construction of a pipeline from Alaska’s North Slope to the Lower 48 states. However, such legislation is yet to be signed into law. In spite of the outcry we have come to expect that without Federal action the pipeline will never be built. In spite of that, we hear rumblings that companies are coming forward to negotiate with the State of Alaska in order to clear some legal hurdles nec- essary to build it. The newspaper accounts have the thing built already. All of this activity has occurred despite the fact that Federal legislation is stalled in the Senate. Is the Alaskan natural gas pipeline going to be built without Federal legislation? What is happening in Alaska now that would give us some encouragement that it will be built? Finding the an- swers to these questions is what this hearing is all about, and I look forward to hearing from the testimony from the witness. Today, actually we have an update. Today’s Oil Daily reports that Enbridge has filed an application with the State of Alaska to negotiate a contract for the construction of the Alaska pipeline. We look forward to hearing from Enbridge about all of this and the late breaking news and to explain the article. This news comes on the heels of an earlier article this week discussing the competitive na- ture of the project between TransCanada and Enbridge. That arti- cle even discussed the possibility that these two entitles would eventually work together to complete project. This should be a very informative hearing today. One question the witnesses probably cannot answer: What hap- pened to MidAmerican? I have just received a letter rom David L. Sokol of MidAmerican essentially saying that while it pulled out of the negotiation with the State of Alaska, the project needs to go forward and needs to be built for the benefit of American con- sumers. Without objection, I would like to submit this letter as a part of the record. Without objection, it is so ordered. [The prepared statement of Hon. Ralph Hall and the letter fol- lows: PREPARED STATEMENT OF HON. RALPH HALL, CHAIRMAN, SUBCOMMITTEE ON ENERGY AND AIR QUALITY Thank you for coming to this hearing on the Alaska Natural Gas Pipeline. I espe- cially want to thank the panelists for attending and for their written testimonies. I look forward to hearing from each of you. The Subcommittee will come to order. Without objection, the subcommittee will proceed pursuant to Committee Rule 4(e). So ordered. The Chair recognizes himself for an opening statement. The people of the United States are demanding an ever-increasing amount of nat- ural gas. Americans use roughly 62 billion cubic feet of natural gas every day. Nat- ural gas is the fuel of choice because it is clean burning and environmentally friend- ly. The problem is we are not producing enough natural gas to be self-sufficient.