Leaders in both the state House and Senate have listed energy legislation as a primary focus of this session. That’s as gas producers warn that Cook Inlet natural gas supplies are dwindling, threatening higher prices.
But there’s only about a week left for lawmakers to pass bills that address a number of energy issues. So it’s a good time to check in with Alaska Public Media’s Capitol reporter, Eric Stone.
Listen:
This interview has been lightly edited for length and clarity.
Casey Grove: So, remind us, what sorts of proposals are on the table?
Eric Stone: Well, there are a lot. Lots of them have to do with boosting natural gas drilling in Cook Inlet outside of Anchorage.
Hilcorp, the biggest producer in Cook Inlet, can’t commit to supplying enough gas to automatically renew utility contracts over the next few years.. That’s a problem because people use it to heat their homes and power plants use it to make electricity. That’s threatening to push prices up.
So there’s all kinds of stuff on that front. Two bills have already passed out of the House. One would provide wide access to older seismic surveys, which drillers use to find oil and gas deposits. The idea is it would save explorers money, and thus make drilling more economical. Another would expand natural gas storage, which is supposed to also make gas cheaper in the long run.
And then there’s royalty relief. Some quick background — companies pay royalties on oil and gas produced on state land. Those are generally about 12% to 16%. And there are a variety of bills out there that would reduce or eliminate those royalties, basically making it cheaper to produce gas.
They’re still working out the details in the House and Senate on those — and there’s some skepticism about whether reducing royalties would actually lead to more drilling. A royalty-free lease sale last year attracted about as many bids as in past years.
Casey Grove: So lots of focus on gas, which is understandable. How about other energy bills?
Eric Stone: There are a couple others that are interesting — House Bill 50 is a carbon storage bill that’s a big priority for the governor.
It would set up a system where carbon dioxide is pumped underground rather than going into the atmosphere. Most of Alaska’s carbon emissions come from operations on the North Slope, and conveniently, there are plenty of underground areas that are good for storage.
And there’s also the possibility of sequestering carbon imported from places like Japan. That’s a little theoretical at this point, though — carbon dioxide exports are a very young market and nobody’s quite sure what the future holds. And there’s also a concern that the way the bill is currently structured, it could wind up costing the state money rather than making money.
That bill picked up some interesting amendments in the Senate Resources Committee, including one that would essentially result in Hilcorp paying a lot more money in taxes. And a few of the gas bills I mentioned earlier were rolled in, as well. But those got stripped out in the Senate Finance Committee, and we’ll see if they get added back. They are still actively working on this.
And they’re working on another energy bill important to the governor — it would create an integrated transmission system for the Railbelt. It would basically make it cheaper to move electricity from point A to point B on the Railbelt, and make it cheaper to produce renewable energy.
Casey Grove: That’s quite a bit to get through with a week to go.
Eric Stone: Yes, it is. And it’s not entirely clear that’s enough time to get things over the finish line. Like, on the royalty relief bill, it’s not clear if there’s enough time for analysts to say what effect it would have on drilling. Some of this has to do with the timeline for getting the legislature’s consultant under contract — there’s a great Anchorage Daily News article that goes into it in a lot more detail, but more or less, some behind-the-scenes stuff wound up delaying the contract.
But as I said a moment ago, there is some pretty intensive work happening on the carbon storage bill, the Railbelt transmission system bill and another I haven’t talked about, which would create a “green bank” to finance sustainable energy projects. Sen. Bert Stedman, a Sitka Republican and co-chair of the Finance Committee says those are big targets to get passed. But we’ll have to wait and see.
