House Finance, 5/29/26, 1:30pm

Okay, I'm gonna go ahead and call this meeting of the House Finance Committee to order and let the record reflect that the time is currently 1:42 PM on Friday, May 29th, 2026. And online we do have Representative Moore, and then we also have Representative Allard and Representative Step, Representative Bynum, Representative Kocher-Schraggi, Representative Kocher-Josephson, Representative Jimmy, Representative Galvin, Representative Tomaszewski, Representative Hannon, myself, Kocher-Foster. And just a reminder, if folks can mute their cell phones, um, let's see here. So we will be returning to House Bill 381. That's the gas line bill.

We have invited testimony. I believe we have 6 folks. We've got mayors and producers. First up, we'll have Kenai Peninsula Borough, then ExxonMobil, Pantheon Resources, Hillcorp, ConocoPhillips, and finally the North Slope Borough. And so first up here, we've got Mayor Peter Machicki for the Kenai Peninsula Borough, if you would like to— oh, there you are.

I was looking all over. You are front and center. And welcome back. Good to see you again. It has been a little bit.

If you could put yourself on the record. Thank you. Good afternoon, everyone. Mayor Peter Machicki, Kenai Peninsula Borough, and I appreciate you inviting me to testify today.

So good to see everyone.

I'm going to be relatively brief, see what kind of questions you have. I know you have a large agenda today. A little reminder, the oil and gas business in Alaska began on the Kenai Peninsula Borough in 1957. Not sure statehood would have occurred without that. We have a community that is ready, willing, and able to move forward as we have since 1969 with large facilities in our community.

Um, if you remember, LNG, long-term commercial LNG, was invented on the Kenai. So for two-thirds of my life, I sold liquefied natural gas to two Japanese customers, um, well-versed in the impacts on the community. And I wanted to bring something up. One thing I wanted to bring up is that there's a reason for property taxes, right? Property taxes are helping for us all to share in the cost of services in our communities.

Large facilities use a lot of services.

And I wanted to point out the fact that the Kenai has worked very well with industry over time. In fact, with negotiations that reduce the holding cost of facilities being fair while they're operating and reducing the holding costs while they're not. Why? If this project goes forward, uh, a neighboring facility called Nutrien, which used to be Unical, if you will, the large, um, facility next door, uh, if there's a substantial availability of excess gas, they will likely be producing ammonia again. Ammonia is a byproduct of hydrogen for those countries still in the Paris Accord actively, like Japan.

That byproduct is very important for the production of hydrogen. I also suggested the AVT, and I'll just tell you the very particular reason for our community, aside from the litigation that occurs with a mill rate. And the Kenai Peninsula Borough is the lowest mill rate of 4,356 communities, um, all over the state, right? So the mill rate in that area is approximately 8.5%. Um, the reason I like an AVT is if there are excess dollars impacted, community members would have the potential to have a reduced property tax rate since an AVT is separated from the traditional mill rate.

It's traditional mill rate When you lower the mill rate, um, for your citizens, it also lowers the mill rate for the larger industrial payers as well. So you're not really gaining a lot. I really appreciate you taking the time to understand the impacts on communities like mine. Now, we, we worked through the study that the project provided, and remember, we've had many large facilities in the community, including Marathon, that's operating today. We recently had the Republican convention in town while Marathon had their turnaround, and there wasn't a hotel room to be had.

There's 1,400 workers in the community. Pretty significant impacts. We found them all a place to stay. And Representative Sharkey, thanks for coming to that convention. I appreciate you joining the Repub— that's a joke.

Anyway, It's a small community and those impacts are felt when big things happen, right? So we really appreciate you looking out for the impacts on our community. We are clearly the most impacted community if this project moves forward, and we hope it does. Uh, will be— the highway will be rerouted around the project, very substantial change. The borough will be partnering to Reconnect those subdivisions.

When you look at the impacts on solid waste and schools and roads and the things that will be occurring, they are substantial, and we worked that out. We are not a community that rubs our hands together on mass quantities of cash that would be available because of this project. We are simply trying to make sure that our costs are covered. We are trying to make sure that Retirees in Nakiski are now subsidizing a giant global project. And I'm going to explain subsidy because I have seen a cheerleader for the administration that goes online questioning these things.

To define a subsidy is when our taxpayers are covering the cost of someone else's project. We're not asking for a lot more, we're asking for enough, right? And we're getting very close with this bill.

The negotiations started awkwardly. This is a company teamed up with administration. I would have handled it differently from the beginning, but I have to give credit where credit is due. We've had a lot of meetings lately. I feel like we're moving in the right direction, and I'm very appreciative for that, working with AGDC and Glen Farn and agents of the administration, the administration.

I feel like it's going well. So I'm not even going to get into the economics of the project because that's not my job and that's not why I'm here today. I can talk about some of the issues, the 45Q interplay, the capital federal tax credits that might make this project more economical. I just want to get into the fact that I'm concerned about the divorce of Phase 1 and Phase 2. I'm hoping they're both economical enough to join in the very near future because it's very important to the price of gas for Alaskans, which is all of us.

If you're living somewhere else off of the grid for natural gas, um, you will care. Most commerce for the state occurs in this city. When the cost of energy is exorbitant in this city, um, it is for almost everything we produce, right? Aside from the fact that commerce that could occur at a competitive price of gas will not occur when it's not. So I think the project is very important.

I've given presentations to several legislative committees from the Coalition for South Central Mayors on our concern for the lack of future natural gas resources in our area. Or supportive of the project. I just think it's important that, um, as we discuss these issues, you remember kind of your role. This is like how I see your role, just from an ex-legislator. I remember wanting to control every aspect of a project, right?

It's like what you naturally do sitting in those seats. But the bottom line is 138 sort of allowed the execution of a project by a private sector company. We only own 25% of that interest. The intimate details, it is nice to know about. I would always like to know more about the bottom line economics of it.

But it is a private sector project. They are either going to succeed or fail on their own. We do need this bill. And I hope this bill does leave communities protected from the subsidies that would have occurred with a 90% reduction in mill rate. In my community, we would have been subsidizing this project.

Under the current terms, we're getting a lot closer to being kept whole, depending on the things we know and the things we don't know about the impacts of this project. It's going to be a big deal. It's going to change my community forever. We'll be living with it every day, not just for 4 years of construction with thousands of workers, but for 40 years afterward. Want to make sure that we have a little room for what we don't understand and that we're covered for the impacts that we do understand.

So many pieces are still missing. I think the passage of this bill gets us to the next stage. See if this project is going to be successful. I'd love to see us go to FID, and we'll learn more about those pieces. But right now, they're somewhat on hold.

And I know that our— spent a couple hours with Senator Sullivan. I know our federal delegation is engaged. Don't know what pieces come forward if we get to this next step.

But I do want to close by saying I appreciate you taking the responsibility so seriously and looking out for us. That is your job. Looking out for us is your job, and I know that you are taking it seriously, or this likely would have moved a little quicker and would have left some of us holding the bag. So not greedy, just want to make sure that we are kept whole going forward. We don't know what the ultimate price is going to be.

We don't know what the ultimate schedule is going to be, but we do know that through your hard work will be protected. And for that, I am very appreciative.

Mayor Machicki, thank you. I would also like to recognize that we had a number of legislators join us today, and we have got Representative— I believe I saw Representative Aishide, Representative Mears, Representative Sadler, Representative Colon, and did I miss anyone? Thank you for joining us today. We do have a few questions, and Representative Hannan, then Representative Stapp. Representative Hannan.

Thank you, Chair Foster. Mayor Machicki, it is really good to hear your perspective on this because sometimes by asking questions, people think I'm opposed to the project, but instead I'm still trying to learn and make sure that we are protecting the state communities like yours. So you said two things that I think you can help give me some guidance on, and one is We know there's a mitigation fund that's created in the bill. There's been some discussion of a set amount, and then it appears that the state, if local communities had additional mitigation in excess of that initial fund creation, that it might turn to the state to provide that cost. So I want to make sure that we're crafting a bill that the mitigation fund is enough for communities to address their needs.

And I've heard some description of it, well, communities could submit real bills for real projects. So I assume that means the bridge that didn't carry the weight for a piece of equipment, something like that. Are there other areas of mitigation that we should be thinking about and making sure that we have crafted language so that we are acknowledging not just EMS calls, but water and sewer expansion, even though everybody keeps saying they're going to be man camps, they'll be wholly independent, blah, blah, blah. But in a community like Kenai—. So there's, there's two phases that I think are important to consider.

There's a construction phase that will have significant impacts, the pipes coming into Seward, traveling our highways, on our, um, some borough roads. Once you get to phase 2 The impacts will be significant on the Kenai. I can't say that I know what all those impacts will look like. We're willing to be a partner on quality housing. 4 Years is a long time on a 4-year project.

What our experience has been in the past is that some people actually choose to move their families up. So you— the only thing more difficult to manage than permanent increases in student populations is temporary increases in student populations. We don't know entirely what that looks like. The mitigation fund will be important, not only in pre-planning for construction, but during the construction phase. No one can pretend to understand as the project develops what those impacts are going to look like.

So room is important. Having a little room is important. Subject to appropriation always worries me, worries us in the munis. I was in the legislature for a long time and a lot of those subject to appropriation things, in fact all of them, went away. When things get tight, munis are left holding the bag.

It's funny to hear me talking as a muni guy now because I remember saying, "Oh, come on, those guys always say that." It's real life. I mean, I'll just give one example is school bond debt reimbursement. Right? A lot of things. I have a long list, so do many of you, of what has gone away.

So subject to appropriation is something that worries all of us in the municipalities.

If you look at the study that AGDC put forward on community impacts, they are substantial. It is a significant portion of our annual budget will increase due to the project. That is okay. We deal with that. But it would be nice to know that we had a direct line with some advance payment for preplanning to understand those impacts in more depth.

We don't— we are lean and mean. We don't have the depth to put a lot of time into understanding every aspect. We have some experience of large projects, but it was 50 years ago. We have a growing and rapidly grown population since then. So yes, I appreciate you keeping an eye on that.

And if there is a subject to appropriation piece, I would rather it was put aside for that purpose than it being a fund that could be found to be used for something of a higher purpose by the legislature in the future. One more. Representative Hannan. Thank you, Co-Chair Foster. And Mr.—.

Er, Mayor Machicki, you used the phrase, and it really rung a bell for me, you're concerned with the divorce of Phase 1 from Phase 2. And I think every time we've looked at the economics for Alaskans individually to benefit, Phase 2 has to happen. Do you have suggestions on how we tighten language to make sure that that divorce is not imminent and we tie them back into marriage counseling so that there is not a divorce? Well, you probably heard the words that I used with House Resources when I said I hope that Phase 1 is on its knees with a little package in a very short time marrying those two phases. I mean, again, it's a private developer.

How much can we control the direction of that project. I wish we weren't in a position where they felt there was a risk of not doing Phase 1 prior to an FID on Phase 2.

I mean, I have my ideas. They are very heavy-handed, and I am not sure that that is what we need to be doing on managing this because, again, Senate Bill 138 gave them the right to execute the project with a majority— majority control, and there is no doubt about that. It's their risk. Um, if the price of natural gas does not arrive at a point where it's, um, competitive, there will be other options. That's just how the free market works.

Someone will meet that. Someone will meet that price, a competitive price using another form, whether it's imported LNG or additional Cook Inlet production or whatever, if you're too far out of the realm, that's what the free market does. It finds an opportunity and arrives just in time, if you will. So I don't know that that's where the bill should go. I think we just keep the pressure on and hopefully we have an economic project that arrives at an FID for Phase 2 almost immediately upon the FID for Phase 1.

Thank you. Okay. I would also like to note that we have online Representative Underwood and also in the audience I see Representative Johnson just popped in. Thanks for joining us. And next up—.

I'm sorry.

Oh, Representative Holland as well. Thank you for joining us.

So next up I have Representative Stepp and Representative Bynum. Representative Stepp. All right. Thank you, Chair Foster. Through the Chair, Mr. Mchickie, Mayor.

Former senator and Senate president, thanks for being here. I guess first question to you, I'm going to be— so developer basically gave us 7 problems with the bill in front of us that they say need to be resolved in order for us to be able to move this project forward. Their words, not mine. One of those is Section 5 of the bill. This is the alternative volume metric tax equity option.

Their argument is it basically doesn't allow them the ability to raise capital if they have to allow you guys equity stakes. And the second aspect is our revenue department models that at the full $20 mils when they take the property tax. It makes the project look uneconomical or more so on its face. So curious if you have comments on that through the chair. Yeah, I don't have a lot of comments about the equity option.

I think if you think there might be excess revenue coming to a a municipality like mine, if you wanted to ensure that you— mayors replacing me in the future and assemblies replacing me don't do silly things with money, there would be— it would be helpful for it to be locked away and growing out of the reach of silly things. So that's my interest in potentially having an equity option available. The second question you asked, I think, is very important. In every rendition in my former life with ConocoPhillips and while in the legislature that I was involved with in the AK LNG project or other renditions of this project, everyone knew that the $20 mil structure was problematic. There was not a lot of room in this project, never has been, which is why Again, my wife says I shouldn't say this, but we've been talking about it since I was in puberty and I'm 64 years old, right?

It's a challenging project. So, in my former life and today, we know that the 20 mil structure is problematic. So, hence, the bill and the approach, but still keeping in mind the needs of the communities to make sure that they're adequately protected as well. And I think we're getting close to what that balance could look like. Follow-up, Mr. Coats here.

Follow-up. I think Coats here fosters the Chair. Mr. Pacheco, appreciate the answer. So basically, second aspect is that setting the Community Impact Fund aside, what if Section 5 were removed from the bill? How would you feel about that, through the Chair?

I—. So there are 5 mayors and a state involved in this line. And I'm trying to be a team player on what's important to all of the boroughs. So I think you should bring that up with other mayors. I will.

Determine how important it is to them. It's probably not as important to us. I definitely see value in it for the reason that I talked about earlier. As we all know, we're— I was and you are in a legislature that maybe hasn't been the most responsible with funds over the last 70 years. So when you leave money laying around, someone's going to spend it.

And the more you leave laying around, the less constructively it's spent. So that is a concern for several of the munis, and I'm sure you'll ask that question later on.

Quick follow-up, Mr. Kocher. Yeah, thank you, Chair Foster, Mr. Chair, Ms. Pritchett. Appreciate that. I'm going to take that answer as a probably, but I want to hear from everyone Mr. Schnell's first answer.

I guess last question, I mean, for me, you know, this is an abatement bill.

Do you take any issue with the volumetric tax structure or throughput tax structure in general so long as there is a mechanism to be able to compensate municipalities in the event for the impact fund for Phase 1, Phase 2 construction through the chair? So no, to be clear, I suggested the AVT. I am probably one of the few people in the state that has sat at every side of these tables, um, the industry side, the muni side, and the legislative side. And I like the fact that we share in the benefits when things are going well and share in some of the risk when they're not. So I'm, I'm supportive of that.

As I said, with some of the facilities, there's a reason why the old ConocoPhillips LNG facility is still there. There's a reason that the Nutrien Agrium facility is still there. It's because Kenai Peninsula Borough has been flexible, keeping down holding costs when things are not active. If the holding cost is too high, those facilities go away and become gravel again, and we want them to go back into service at some point in the future. So it's a little bit along that spirit.

I've seen it work very successfully. I think it avoids litigation that is expensive to everyone and keeps things in a relative state of disorder through the history of facilities. My personal, personal opinion is that it's the right tax structure for this kind of a project, so I'm comfortable with it. It may not be the same for every muni, but it is for ours. All right.

Thanks. Okay. And we've got Representative Bynum. Thank you, Co-Chair Foster. Through the Chair, Mayor Machicki, thank you for being here.

I'm trying to ask this question of all the folks that have been coming in front of us, and that has to do with the impact. And we hear a lot about in the media and also through committee this discussion of impact to communities, and you've mentioned a bit of that here today. I'm trying to, trying to get a better understanding of the long-term— when I hear the word long-term impact, I understand the construction phase. We obviously are going to have to move routes or roads or Those things are going to happen, and you have this temporary influx of workforce which is going to impact your community. Fully understand that.

That's obviously, from my opinion, is something that the, uh, that the developer is going to have to take into consideration to make sure that the community is not being harmed. But I also hear about this idea of impacts because, um, there's a potential for the community to grow more kids in the school long term. I see these as positive impacts. Um, your borough has a lot of this, uh, gas infrastructure already in place. A lot of it is not in operation.

And if this project, uh, comes to fruition, we're gonna see those facilities spooling back up and hopefully bringing many jobs, low-cost energy, and other positive impacts. Can you talk a little bit about the difference from your perspective of what you're seeing as a long-term negative impact versus the positive impacts to your —community. Certainly. So I don't use the term negative or positive. I just use the word impact interchangeably.

We are an industrial community, particularly the area where that facility is going. It's about a mile away from a very large facility that closed up. Many hundreds of jobs went away.

And this started back when the Standard Refinery went away years ago, right? We adjust to that. While they're operating, there are ongoing impacts from solid waste that you're going to have to deal with that is typically a much larger volume than what we normally see. There are water issues. There are traffic issues.

Again, small community, when they have a turnaround, it changes life. It's hundreds to thousands of people that show up on a— biennial basis, if you will, for going through the maintenance of the facility to make sure there are no interruption in deliveries to their customers.

When you think about from a quiet neighborhood to a 3.5 BCF a day facility and you look at that footprint, you look at the traffic and all the other interaction, there are impacts. There is ongoing impacts. There always will be. Even after the facility is closed, there are impacts. We've got waterway impacts, we've got the kinds of things you would expect with a large facility in a tiny community.

So if this community were going into a— I'm sorry, if this facility were going into a community of a couple of hundred thousand people, you may not feel them the way you do when you have a community that has 6,000 and has that kind of facilities suddenly show up and then operate for years. So they're there. Again, if I were trying to derive a large quantity of revenue, I'd be fighting to kill a bill that would deliver $150 more million a year to our community. I'm trying to find a sweet spot that makes sure that we don't have exposure and still meets the needs of the community and the project. We want to be part— a partner with the project.

And where this bill is, is relatively close. I mean, it's after negotiations with the project to find out that what it would look like for us in the long term, there seems to be a lot of agreement with being pretty close to where the bill is at the time. So if you look at that dollar amount and you look at the dollar amount that would come in at $8.5 mils, there is a significant difference. There is a size of our overall budget difference. So we are being team players, being good partners.

We want to make sure we are not exposed. And I don't feel like these numbers that we are in the area where we are, are exposing our constituents and citizens to picking up the cost of those impacts. One quick follow-up. Representative Bynum. Have— thank you.

Through the chair, Mayor Machicki, have you guys looked at the offset differential, this potential lost revenue from the tax relief that would be provided so that the project could potentially move forward? Have you looked at the potential offset for the additional people moving to your community, which would then bring additional sales taxes, additional property taxes for homes that are being bought, those types of things. Have you looked at what that offset might be with the relief versus what you might be getting from the community member addition? Yes, of course we have. Um, what we don't know is what that really means.

So when the old facilities were constructed, what people did with hundreds of jobs, now because of automation and efficiency you do with a tiny fraction of that, right? Just like in every other industry today versus 50 years ago or 30 years ago. It's hard to determine how many stay. It's hard to determine what that growth looks like. So our population has not changed since the Agrium facility, which is our largest facility, to close down.

Um, people found, um, other lines of work. Some went to the slope. Medical industry kicked off in a way that didn't exist when those facilities shut down. So there's been a transition economically. That's the part that's the most difficult to determine.

Is there growth? Is the gas at a competitive enough price where agrium fires up— Nutrien, I'm sorry— for the production of ammonia? Um, the facility itself once operating will not add a lot of employment.

How many industries will, will there be offshoots? Are there going to be things like there were in the old days where you had to have parts nearby because the availability of replacement parts were not as easy to come by as they are today? That's very difficult to study and determine. We have to make assumptions. I think there will be some growth.

It's difficult to say if the growth will provide additional revenue to cover the costs. Ultimately, you still have that same problem, though. You have a very large, um, creator of the need for services versus the very small residential services that come along. And the reason for property taxes is people should be paying their fair share of the services. We are discounting those property taxes significantly.

The neighbor next door will be paying 8.5%. This facility won't, and it will be using a much larger lion's share of the services. So we are trying to strike a balance to be partners with a very important facility that we would like to see move forward without having our everyday citizens cover a larger piece of that. Okay, thank you. Okay, in the lineup I have Representative Allard, Galvin, and Josephson.

Representative Allard. Thank you, co-chair. Mayor Machicki, you arguably have the most, um, experience when it comes to oil and gas, I would say, of the borough mayors that are involved, the other 4 or 5. So my question to you is, have you spoken to any of the other mayors, maybe given advice or how they might be able to come to terms that maybe it's a— we want it to be more of a need and not necessarily of a want to make this project go forward? Yes, we have had those discussions.

I think everyone understands that. I think finding— so they also answer to their citizens. I answer to 62,000 people. I would have no reason for a job without serving them. How they see this.

I spent a lot of time explaining the value of this project and the fact that, yes, we could try to cash in for a forever sum of money that would be much larger than what we are willing to negotiate. That is enough.

There are different communities along the way, and they will have to come to the realization on what works for them as well. However, communities are very different. Yep. And if they don't satisfy their constituents, I don't want to say that they could be replaced by someone with a lot less capacity to manage that community, but that's something you have to deal with every day. It's something I had to deal with when I was in the legislature.

You have to make the right decisions and hope that your constituents understand that value. So I'm not— I can't speak for them. I can try to nudge people in a different direction that might be enough versus what can be, but they have to make that decision for their own constituents. May I? Representative Ballard.

Thank you, Co-Chair. Right. And in your experience, this doesn't just impact the municipality or a borough. This impacts all Alaskans as well. So from what I heard from you saying, you're willing to compromise just enough so that all of Alaska flourishes and not just your borough.

Is that an accurate statement? That is exactly what I said. I have a statewide view, which is hard to shake when you leave the legislature. And I have— I put my hand on the Bible for 62,000 people to make sure I do them no harm. So I'm willing to negotiate that balance.

Thank you. Thank you, Mayor Majicki. Okay, next up I have Representative Galvin. Okay, Representative Josephson. Yes, good to see you, Mayor.

Um, one question I have for you is about— my principal question is about, uh, the differences in the, the bills that— I mean, we're looking at 381 now, of course, but But the call invites us to look at more. As I understand it, the House Resources version before us would leave largely your tax structure for LNG untouched. And you could, during Phase 2, negotiate that. I'm told you couldn't adopt an AVT, but you could negotiate the mill rate to some degree. Sitting where you are, that may be favorable.

Um, the, the, uh, version from the other body, SB 280, I, I think imposed a 15-cent tax on your— on, on, on what would be the LNG export facility. Um, meanwhile, the, the governor's version is probably less than that. Um, do you have a preference on on the model, given those facts as I understand them? Well, I saw— I specifically chose to not discuss the bill today. I know that's typically what people do.

Mine was more philosophical in my approach. So I don't negotiate at the mic. I've seen what happens when you negotiate at the mic. But what I will say is this. The AVT should be an option.

We do have under Title 29 the ability to negotiate under economic development that has some flexibility. I would— Representative Josephson, Mr. Co-chair, right? I left. You weren't a co-chair when I left. I would like the option to include an AVT.

So that is an amendment I would like to see for us. Under Title 29, although we technically can. I would like that strengthened to the point of where that would be allowable. So I think that's something that's very important to the Kenai Peninsula Borough. Again, if there is excess at some point, if everything goes fabulously well and they're operating at 3.5 BCF a day and everyone is doing well, I would— if there's an opportunity with excess to reduce property tax impacts on my citizens, it should not involve bringing down the fair share that's being paid by the project.

And that is an exposure as far as I'm concerned. Okay. Follow-up? Follow-up? You talked about existing businesses and what they pay and you want fairness for them.

I guess one of the difficulties— and this is a scheduling I'm saying, because you and I should talk more, clearly. But, but I thought that you were comfortable with SB 180 as amended on our floor. Um, now we're not— we don't have that before us except sort of conceptually in our minds, but it sounds like, given your statements about— I mean, I hear you saying two things. You want the project because you see the greater good for, for the peninsula and the state, But you feel that it leaves you short.

You noted $150 million. And you're not— my phone is not ringing off the hook coming from you. And I appreciate that independence. But I would welcome more direction and understanding of what the peninsula wants. OK.

I appreciate that. I look at the votes on that amendment and what I would say is that we are pretty close on what was in that bill. Either way, it would be a similar consideration from the Borough with the project. So I am agnostic about that final amendment and that is the reason why you saw the Peninsula votes the way they were. Okay.

But I'm— you're still on my phone. I'm sure I'm still in yours. Happy to chat anytime. You may have misunderstood my $150 short. My $150 is we're willing to negotiate to a point where we cover our costs and it will be significantly shorter than the $8.5 mil structure.

So of all the $4,356, of course, we have the authority today under Title 29 to negotiate without a change in law.

But we are willing to help make the project work. The $150,000 was the likely lower revenue that we would be bringing in by negotiating with what is enough.

Okay. That wasn't a complaint. It was a recognition of our willingness to work with the project. Okay. Senator Josephson.

I think finally, as a former state senator with a statewide perspective, can you appreciate that the $90 million proposed in one iteration that the state would provide to backstop the smaller direct impact aid strikes at least this legislature as very costly and an imposition that I didn't create, that the state didn't create. It may, it may benefit from because the project has that sort of value.

I guess, can you understand how some legislators would look at that $90 million backstop and be— have a problem with it?

I think that structure would be unlikely to result in relief when necessary due to the appropriation necessity for those dollars. So from a municipal point of view, it has relatively little value to municipalities. I know what it's like when you guys get tight. I know it gets tight first when it gets tight. So I understand your concern and that's just a decision you're going to have to make on what that structure should look like to be effective and something that creates some comfort for municipalities as well.

Representative Josephson. As typical legislators lie when they say final comment. But it sounds like rather than being a pass-through and recipient of state benevolence and largesse, you would like to receive the dollars, receive the revenue yourself. That is not a trust issue for all of you. As I was saying, I understand when things get tight, you have to make really difficult choices.

And if you are able to look at and say, wait, these guys are already receiving this much, they should be able to manage this. We have this school issue, school funding issue, or we have this other thing, we're going to prioritize those dollars for that other thing as we have as legislators in almost every situation like that. Thank you. Yes. Okay, next up I've got— actually, I'd like to note we also had Representative Mena step in.

Thank you for being here today. And I've got Representative Galvin next. Thank you, Co-Chair Foster, and happy birthday. Um, I thank you so much for being here, Mary Machicki. I wanted to ask you, as someone who has been serving many for many years, um, kind of the big question in the room, uh, that I'm hearing more than any other question, and that is this gap between Phase 1, Phase 2, where there's a little bit of uncertainty on our part as to how the rates may go to the ratepayer at home, looking at their monthly bill.

And if the volume isn't up and things are— the timing is off, let's say, and maybe we're importing by then to bridge a gap, but the price to the ratepayer and protecting that, if possible in statute, is really the puzzle I've been looking at for the last few weeks. And I know that you are familiar with how tricky it is to find solutions by statute. And so I wanted to give you the space, if you would, to opine on that and give us your thoughts. Geez, look at the time though. We've got so many other people you want to hear from.

So thanks for hearing from me, and I know I appreciate that. It is challenging. So what I said in my testimony is We need the bill. I think the bill gets us to— I think other pieces have to come to fruition, and I think the passage of the bill allows those pieces to be— like I said, I know our federal delegation is well aware of this and working hard. I think other things can happen to deliver a better price.

Phase 1 is challenging. You've seen the Department of Revenue estimates, right? It is challenging. But other things can happen with some certainty in the project that can bring that price down, possibly significantly. And I'm hopeful for that.

We can't get to that point without solving this piece of the puzzle. I think other pieces will come into play that will be more favorable.

Follow-up? Rep. Galvin. Thank you. And I'm going to, again, um, I'm going to do my best to try to pick at your creative brain. I know that there have been lots of ways we've been thinking about this, whether it's making sure that there's perhaps a way to look at what the RCA is doing and how and if it's possible for them to require the producers to hold whatever, if there is an overage or if it's the timing or what, if it is that we end up with longer period of time on importing, etc.

But there is some ways, I believe, that there may, that may be looked at. Would you be, as a local community leader and former legislator, could, would you imagine being supportive of statutory changes in our— in this bill that would help bring this to the forefront to give that comfort to ratepayers. Yeah, let me think about that by taking a little bit more time to evaluate what might be helpful. I will just say this: Phase 1 creates a mortgage, and that mortgage would be very difficult if it were not supplemented with additional volume through Phase 2. Right?

We know what that looks like. The in-state usage is tiny. I mean, it's always been a problem for Alaska. We have such a tiny market. So when you look at big investments, it becomes very difficult and very unmanageable very quickly.

It requires Phase 2 in order to be economic. We all know that as ratepayers. So when you already have the mortgage, it would be very difficult to pay that mortgage with Phase 1 alone. I think you naturally must immediately get to a Phase 2 in order to control the bloodletting, if you will, of the cost of Phase 1. I believe that's going to happen.

So I— There's some comfort in that, and I know you're all not surprised at the price of natural gas at the meter for Phase 1. You can't leave Phase 1 hanging out there. It's a tiny local market. It'll take some time to replace the Cook Inlet market. It's not going to evaporate on day one, right?

There's significant investment occurring right now to keep the lights on and the heat on, and we're grateful for that. So it almost has to follow immediately with a Phase 2 FID. I think Phase— eliminating some of the risk in Phase 1 will help draw investors more so than the fact that right now every— no one knows what's going to happen, and I think it's sort of squashing any forward motion on Phase 2 development. Because of that. So that's in your hands right now.

I wish you the best. Pray for you guys. These are tough decisions, but I think you'll get there. And I very much appreciate being here today. I'm going to sign off.

So I think— I don't think you have any more questions, especially with me saying that. And I'll look forward to listening to the next testifier. So thank you and happy birthday. Appreciate it. Mr. Mayor Machicki, thank you for being here today.

Good to see you again. Thank you. And so next up, I had intended to go to Exxon. I do know that Mr. Griffith is in Texas, I believe. However, I apologize.

I think some of the things that came up in this presentation probably dovetail into the North Slopes presentation. And so I think we'll go ahead and jump right into Mr. Mayor Puckettuck. And if you'd like to come up, and then we'll go right into our presentations from Exxon, hearing from Exxon as well as from Pantheon. And so, Mr. Puckertuck, I think you know the routine, and good to see you again and welcome back. Thank you, Mr. Chairman, other chairs, members of the committee, firstly for your sacrifice to serve all of the districts in the state.

I think Machiki was hitting on the responsibility, him formerly as a senator, myself formerly as a representative, that we understand that it's our responsibility as elected officials and you guys specifically as representatives that we look out for the best interests of all of our communities and that the resources that we have to deliver, whether they're to market or to our residents, are equally shared by us all. So I come with that spirit of understanding, and it's not anything new as far as the history of the North Slope Borough. With that, I'd like to make sure and have my finance folks and oil and gas advisor come to the table in case there are questions that are beyond my expertise. But generally speaking, thank you for the brevity in the scheduling and obviously moving things around so that we can speak to it. I would say that— A lot of what Mayor Machicki spoke to, for the most part, I agree with.

I think there's some other context that I'd like to elaborate on as far as the responsibilities of the North Slope Borough. So I'm sorry, Mayor Pukutuk, I just wanted to let folks know at Conoco I hadn't forgot about them just in case they neglected to turn the page. So with that, Mr. Pukutuk. Thank you, Mr.

Chair. As I stated for the record, Josiah Pukutuk. I serve as the mayor of the North Slope Borough. You should have a slide deck. I don't know if it's going to be put up on the screen.

Pretty comprehensive. They told me that we'd be able to do Friday. I realized it was your birthday, so I added 10 more slides to it just for you. Mayor Pukkatauk, with that, we're going to be at ease. The slide deck's going away.

No, actually, we just— actually, we do need the brief at ease just so we can get the slide deck up, but I appreciate the well wishes. Thank you. Brief it is.

Okay, House Finance back on record, and now we have the presentation up on the screen from the North Slope Borough, and with that, Mayor Putkonok, thank you very much. Thank you, Mr. Chair, members of the committee. For the record, Josiah Putkonok, Mayor of the North Slope Borough. Have my team here, I'll allow them to introduce themselves here shortly.

Again, thank you for the scheduling accommodation as far as the relevance of the discussion from the previous speaker and how important it is for all of us to work together to get this gas line built and complete to deliver gas to market, but gas to the rest of the residents of the state too. So with that, always good to start with a good cover page. We're ending our spring whaling season here here on the North Slope, with Barrow as the last community to be whaling, and it's been a successful one all the way down to the ends of your district, Mr. Chairman, in the Bering Strait. So again, I think to cover some of the objectives that I plan to communicate to the committee and the listening audience during this presentation is just a real good history and overview of the borough tax framework and the framework and services that we provide to our community and how it might differ from communities across the state and municipalities across the state. After that, I think I'd like to touch on the contemplation of the different variables of the proposed tax packages.

I think Representative Josephson, you spoke to earlier about the call is for the entirety, and that's kind of the approach that we're taking with the presentation, not just specific to HB 381. After that, I'd like to roll into kind of the preferred results, and hopefully by the end of it, you're understanding kind of the reasonings of the results, and then just an open discussion from members. And to take a break, I think opportunity to have these folks introduce themselves. Mr. Chair.

Okay, Mr. Lamani. Thank you, Mr. Mayor, Mr. Chair, members of the committee. For the record, Fadil Lamani, I'm the Director of Finance. For the North Slope Borough.

It's great to be before the committee. Thank you for this opportunity. We look forward to the thoughtful discussions as it pertains to this very important legislation as it impacts and benefits all of Alaska, not just the North Slope. And so with that, I'll turn it over to Cody Rice. Cody Rice, oil and gas policy advisor.

To the North Slope Borough. Thanks for your time. Thank you, Mr. Chairman. On to the next page. I think it was important to discuss the foundation of the North Slope Borough.

It came after not only the sale in Prudhoe Bay, which generated revenue for the state, but we didn't have a municipal government established that was cohesive across the entire region, and that was one thing. The goal was in the beginning, the focus was to provide education close to home. Folks were going to Sheldon Jackson, among other places during that time, and provide good water and sewer infrastructure to our communities and work with the federal government to provide good healthcare facilities within our region. And so that was the original pursuit in 1972. And over time, as Prudhoe Bay was developed, westward expansion, southward expansion, eastward expansion, even northward expansion into nearshore manmade islands, we've worked very hard to balance the economic interests of not only ourselves but the state of Alaska, general markets.

I mean, we recognize that the North Slope region serves as a hotspot for domestic production for oil and gas, for the United States, so we recognize that role that we have to play with kind of that energy dominance discussion that the federal government is now having again, but balance all of that with the viability of our Inupiaq people to continue to live and hunt on the lands that our forefathers have done so. And so as we develop the functions of government of the North Slope Borough, one of the critical ones was originally the Department of Environmental Management, and it wasn't— it was chosen management for a reason, because it's to manage, to get the resources available, not necessarily conservation. It was a real actual discussion that they had back then, and from that it stemmed to the Department of Wildlife Management, and then through the mayor's office we structure kind of the policy discussion on where we incorporate ourselves themselves into the oil and gas sector. One of the things that I like to note is that 50 years ago when we were having the same discussion regarding the Trans-Alaska Pipeline, it was that collaboration between the developers and the North Slope that brought the pipeline to a height that allowed for caribou to migrate. That's one example of where it's good to work together from the developer standpoint with the local municipality to balance those interests.

And so, really factual read-throughs of this, I don't think I'll do. I'll just kind of talk, and if there are questions, I'd love to answer them. Leaning into the responsibility of partnership that we've had since the inception of the borough— I forgot to mention that, you know, we established the borough in '72, charter commission was done in '74, and from then, anything that has happened on the North Slope after that, we've had a hand in helping craft to make sure that there's win-win-wins across the board. And so I decided to put a picture of one of our longest-serving mayors— he served 5 terms over the course of the borough history— George Mauch. And he was critical, as were the other mayors, in making sure that different landmark pieces of agreements for the state and for the nation were met with that win-win situation in mind.

And so you see the tax TAPs, tax agreements, which as we all know went through a number of years of litigation. We were able to get to a 10-year agreement between all parties in 2016, which probably made some lawyers angry because there was less billable hours available, but it was a sign to being a good faith partner with industry. We have the Point Thompson tax settlement that we've worked on over the years between the state and the North Slope Borough, along with the Point Thompson owners. Despite who was producing it, whoever carried the tax bill on it, we've had to work very diligently with those folks to manage the valuation, not overvalue it, not undervalue it, and work together on those things. I will say that as we get into the discussion about the contemplation of the gas line and the gas treatment plant, that there are some nuanced differences as far as in the, in the example of Point Thompson and how we are typically working with the state because they share the other $2.01 mils that we don't elect to take.

They're recipient of the tax revenue. In the situation that we're talking now, depending on if the state elects to take its 25 5% ownership, they would not only be a recipient but potentially a payer. And so that's a difference in some of the landscape that we're working in. We've had a long history of NPRA advocacy and regional coordination with the federal government and any kind of operation plans or mitigation measures or exploration permits, any of that. We've worked hand in hand with some of the industry operators that you'll hear from shortly, to make sure that they were defendable in the courts and being a partner in those things.

Too loud? Too quiet? Do I need to speak up? No, I'm kidding. And so the next one was Willow, obviously.

My time in the legislature, I spent a lot of time in your offices for those that I overlapped with, talking about the need for responsible development. I think from there you can pull a lot of things, and I would highlight that one of them was that I'm a fair and honest negotiator, and I think that plays its role later in the discussion. Apart from that, we've actually— Mayor Machicki was speaking to some of the impacts from a utility perspective. Just so folks know, we provide the water, wastewater treatment facilities in the Prudhoe Bay area as a service to all of the operators. We've issued, I think most recently, $100 million in debt, all financed by the North Slope Borough to provide that service to the operators, I believe in the 2013 timeframe.

We also issued debt to manage the waste facilities, and so all the waste that's generated on slope, we pay for the CAPEX to build out the different tiered waste dumps and then the opening and closing of cells thereafter. And so, again, a strong partner in making sure that things can be done responsibly on the slope. Representative Galvin, I know you mentioned the polar bears on the bottom of the slides. I joke with folks that that's the North Slope Borough and interchangeable between the state and industry, but they're not fighting, they're kissing. So the polar bears are kissing.

A couple of other things I think I spoke to as far as the development of Willow and other westward development. Obviously we share in the astonishment of the lease sales into the NPRA. But as those things begin to get developed, it's going to be critical to make sure that there's a willing partner in the North Slope boroughs and municipality to defend these projects despite changes in federal administration. And I think that's something that folks may not think of in the here and now, but a few years ago when we were working hard to get Willow across the line, I think it became relevant. The other thing that other folks don't necessarily hear about a lot is the endangered species kind of lawfare that is played at the federal level.

Obviously, we love to hunt and eat all the marine mammals, polar bears included. See the necklace here? They taste good with ketchup. I think I've said that on the House floor before. But what has happened is with the Endangered Species Act, folks have utilized listings of different animals and then when they come ashore, whether it's the walrus, the polar bear denning, the bearded seals, they list those areas as critical habitat and then there are incidental hazardous authorizations that are required by industry operators.

We've actually been— hand in hand with defending the science behind listings, making sure there is real science behind listing so that you're not just going after areas of land to make them off limits to not only industry but also our hunters. And so we delve a lot of money into the Wildlife Department, which does a lot of that marine mammal research, which the state doesn't really do because they don't have much oversight over the Marine Mammal Protection Act authorizations for game management. Whereas the North Slope Borough has one of the most unique co-management agreements with the federal government when it comes to the bowhead whale. They kind of apply similarly to the polar bears, seals, bearded seals, walrus, beluga, but they're under a different section. And so we put a lot of money into making sure the science is there for the purpose of us being able to hunt them and access them.

And by indirect benefit, it also helps industry as far as an access issue. And so a good thing to point out in my perspective. On the next page, I don't know if you can tell, but I like to joke. This is just a presentation of the North Slope borough, a little bigger than the state of Utah. We have 8 communities in the North Slope, 2 of which run off natural gas.

Barrow has run off natural gas since the 1940s when the DEW Line and the Department of Navy were present there. Nurksit has actually most recently run off natural gas since 2006, which was a benefactor of the Alpine development about 20 miles northeast of the community. Uh, you might wonder why I put a picture of my derriere there. That's me drawing the North Slope, uh, in 2024 at the Glenfarn Headquarter Office in New York City to kind of give sight and picture to the area in which they're looking at going to work in. And so as far as engagement and trying to get to a good point, I think these kind of things speak for themselves.

Again, if there are any questions, feel free to lodge them at me. Now we get into the borough governance. I think I talked a little bit about what's tied into the governance aspect of it. One of the things that folks may not be familiar with is in addition to all the normal title powers that we've enacted to take from the state and then therefore are responsible to pay for is the planning and permitting aspect. And so we have Title 19 powers within the North Slope Borough, and that was to make sure that industry operators as far back as the '70s were accountable to the region to make sure that they understood the importance of balancing our access to subsistence along with the financial interests of everyone else.

Just another overview, the mayor— it's a strong mayoral executive system. And we are— we get our authorities from an assembly elected at large, so there's no districts. And so this idea of cohesiveness is something that is baked into the foundational principles of all of our organizations. And so I'll just note that if there were to be an agreement to be struck, like a PILT or otherwise under 2945, the Assembly would have to be in agreement with those things. And so there's a lot of vetting to be done on any kind of agreement that I might pursue.

I think the last bullet point kind of speaks for itself. I'll go to the next page.

And so I've heard the— both when I was a legislator, prior to that as an assembly member, and now as the mayor— discussion on the concern for the North Slope's ability to levy taxes on a per capita revenue, apples-to-apples type of comparison. And I think it's important to talk a little bit about the difference of the North Slope borough in comparison to other municipalities, or even where the state might do different things in different areas. And so you all are aware of some of those things as your budget subcommittee process goes forward. And so to talk a little bit about where the North Slope Borough takes the financial burden on a lot of these things versus going to the state for funding. And so straight to the third bullet, it creates a higher demand on public services that are bore by the North Slope Borough.

And we've estimated— we haven't had enough time to really dive into the numbers— that approximately $205 million annually would be shifted to the state operations if the North Slope Borough didn't take them on. Education and related infrastructure— we build all of our schools on our own debt in the North Slope Borough. We have participated in school bond debt reimbursement in the past. We do not participate in the REAA funding or the major maintenance funding. And so, as we talk about our reliance on debt, I want folks to think about if you were to go to the bank and apply for a loan, they're going to look at your income.

And what does a different tax framework do to being able to go to the bank and justify getting debt? And so, as we talk about these things, I'll hit on the debt aspect of it later and some unanswered questions as far as the financial health of the borough in our ability to take out debt to provide these critical infrastructures. So public safety, we do— we do participate in the community jails grant, but only for one community, and then the rest of the community we have holding cells, and then the regional jail in, in the Bay Area that we build and maintain ourselves. The water and sewer infrastructure, same thing, we don't take from any Village Safe Water funds that might come from the state of Alaska, even though based on our ability to grant write and all of those things, I think we could probably take a lion's share. Looking at the math, it would probably— at a 2% APR with the Village Safe Water, we get about 3.5% on the bond market.

We could save some money, but we understand that those are competing with funds across the rest of the state, and we don't want to do that, right? And so we, we self-fund all of our water and sewer infrastructure also in the Prudhoe Bay area for the industrial operations of that area. And so roads and transportation, same thing. We maintain and levy FAA funding for 6 of the community's runways, and they're the 6 communities that wouldn't make any money if they were ran like the Prudhoe Bay Airport and the Barrow Airport are. And so the state of Alaska has the responsibility for the Barrow Airport and the Prudhoe Bay Airport.

All of our roads and water courses under the public works section is paid for by the North Slope Borough. We don't take any operating dollars from the state of Alaska for any— there aren't state-maintained roads with the exception of the Prudhoe Bay area. And so that's to give a little context to kind of the unmeasured demand on state services that would come if we were to just look at the per capita funding of the North Slope Borough. Health and social services, same thing. We partner with the state of Alaska.

We build the infrastructure for our CYS facilities, our health clinics. We partner with IHS through our tribal organization to make sure we can meet those needs. But a lot of the capex up front is bore by the North Slope Borough or IHS. Partnership where we're not taking— trying not to take from the resources that the rest of the state has to share. Search and rescue is another thing.

Folks might hear about our helicopter that we have on the North Slope. It's a Sikorsky 92. But there's important things to discuss about that because the reason that we purchased the Sikorsky 92 is because when there was the contemplation for the Shell offshore development, we realized that we would then be responsible for some type of support in a catastrophic event. And so we essentially copied and pasted what Shell had as far as a helicopter so that we can meet that search and rescue need with a major industrial offshore operator. So those are the kind of things that we would consider as far as direct or indirect impacts to municipal services.

Aside from that, the North Slope Borough responds to calls from the state emergency response teams to conduct searches both in our jurisdiction and outside of our jurisdiction. Most recently, we helped the state of Alaska with the body recovery in the Kotzebue area. We've been called to go down to the Bering Straits. A lot of the times the Coast Guard is 2 or 3 days away from being operationally available in the North Slope, and so we rely heavily on the North Slope Borough Search and Rescue. That's part and parcel also to the industrial area of the Prudhoe Bay region where our police force, our search and rescue are responding to simple, you know, natural causes deaths in the, in the Prudhoe Bay area.

From that all the way to maybe a guide transporter or a sightseeing transport a reporter is stuck somewhere in the Brooks Range or outside of the Brooks Range, North Slope Borough is typically first response to those kind of search and rescue efforts. Housing solutions I won't talk very much about. I think we all understand the housing struggles that are felt across the state and more recently the nation. And we do some work there very similar to Alaska Housing Finance Corporation for our residents. We do a lot of the same types of offerings, considering that the cost of living associated with dividend distribution from corporations don't allow a lot of our residents to apply to ANTH or AHFC minimums, right?

And so we do some work there. Power generation and distribution, I think, is an important one. I— again, I'm trying to present things so that you guys can understand how I'm looking at these— this tax discussion and the gas line discussion. I had the opportunity to serve 3 years on a utility board in Barrow, so got pretty fluent in microgrids, which we understand we have in each of our rural areas at least. No massive PPA that, you know, can do power generation and distribution across the entire state.

And then the balancing of the cost per kilowatt hour. I think it's important to note that we build, own, and operate and maintain all of our power generation facilities in the North Slope in every one of our communities without competing for power cost equalization funds. We do our own version of power cost equalization as a balance transfer in our budget. And I'll say that with the exception of Barrow. Barrow, we have an actual not-for-profit utility set up that we help once in a while, but it's not an operational expense that we see on an annual basis.

So, um, just to kind of highlight it and then to wrap it all together, uh, on the overview page, this is the borough's budget. Uh, we have the, the resources, uh, revenue type, and so property tax obviously is, uh Represents 96% of our operating dollars. Again, $200 to $250 million of that is in operating only. What, what would otherwise would be considered the state of Alaska, that doesn't include the capital expenditure for the debt or anything else. And so we have federal intergovernmental, we have some whale counting and more recently kill-efficient whaling bombs and stuff that we work with the federal government on because it's a mandate from them.

State intergovernmental, the community jails, all the kind of automatic partnerships that are had between the state of Alaska and other municipalities. And then the charge for services is not only the— our version of the power cost equalization, but it's also— we run a workforce development operation out of the Prudhoe Bay area. And so another example of partnership, right? We have a water sewer operator that also runs a hotel. We partner with them to run— we bought an old man camp, and so we generate revenue by the man camp, but then we roll that revenue into a training program for residents who want to get exposure to the industrial workforce development aspect.

And so I'll touch a little bit on post-secondary education funding and K-12 funding that we, we do in addition to that. And so one thing that I'll point out is— oh no, it's on the next page, sorry.

And then so this is the expenditure by type. And so the borough departments, all of our different 16 departments that we run across the borough. I think another caveat to this is that by having borough employment, that means that you don't have PERS folks that are exposed through state employment. And so we could talk about the unfunded liability that we have in addition to our debt at a later slide. In addition to that, number 2 is the school district funding.

We fund twice the required local contribution, and so that And that dollar amount is in addition to any federal or state funding that may be had. Again, maintenance, construction, transportation, all of that stuff we do.

Oh, I thought there was a question. Sorry. And then the last one is our annual debt service. And so I can get through our presentation of debt here shortly, but essentially about $100 million a year. Pay in debt for all the infrastructure that we build across the slope.

On the transfers, I spoke about it a little bit on the previous page as far as charge for services, but on the operating transfers, that's where you'll see the bulk of the borough version of PCE workforce development, and then the costs to upfront pay for the utility services that we provide to industry.

So this is just a debt profile where that $110 million a year currently stands. I will say that one of the things that maybe some newer finance members may not be familiar with is the tax cap formula. It was most recently changed in 2016, which essentially said that for the North Slope Borough and the Valdez Borough, whatever mill rate you elect to operate under, you essentially have a cap on operating dollars, and then that forces you to shift more cost to long-term debt. And so that's the result that you see here. As I mentioned, we pull out our series based on general obligation bonds and then school debt.

We only kept the school debt separate because of some discussions with the Department of Education at the state level about 10 years ago on if school bond debt reimbursement ever came back, what would be allowable. As you can see in the 2025 series, we've consolidated it. We're not even going to try to bank on school bond debt reimbursement because we understand that the rest of the state has needs that they're going to have to pursue those funds for. And so we have about $500 million in debt that we manage, and that doesn't include about $130 million of unfunded public employee retirement liability.

Uh, onto the next page. Um, just talks about, I think, what we're talking about here, and it's the differences between the tax framework, uh, that the borough elects to operate under. Um, as you mentioned under the 2945 discussion, uh, I think Mayor Machicki talked a little bit about how the liquefaction plant would be a 2945A bull item, whereas the pipeline is to be considered AVT. Our approach is very similar. Have the pipeline stay under AVT.

Let's have a discussion on how we can reduce costs for the operator under 2945 for the gas treatment plant. And so, um, for folks that may not be familiar with it, this is something that we're fairly familiar with as far as the argument to stick under a tried and true tax framework for, for certain things. And so under the 4356 and 2945 tax frameworks, there's allowance for appeals from both parties based on the assessment that the state of Alaska does. And so we believe it's a fair process. As outlined, it goes through the different levels of adjudication, essentially.

And so that's the SARB, which is the State Assessment Review Board and then up to the Superior Court. If either party is unhappy with what happened at SARB, you take it up to Superior Court. Same thing there, you go to the Supreme Court. And this is a framework that has been established under the Supreme Court through— and tried and tested through that system. And so, excuse me, part of the discussion on the methodology in which the Department of Revenue puts forth its assessment is the replacement cost new less depreciation.

And I think this is the point that should be considered. And again, it's not a— I don't think you should do it thing that I'm pointing out here. I'm just pointing out that less depreciation means that the assessed value would go down, so would the revenue, whereas in the AVT model, it's almost inverse where you would assume that over time more more gas would be pushed through, depending on the version of the bill that either has a per cubic foot cap or not on how that AVT works. And so, again, that's something that may be appealing to continually have potential growth in the revenue that's brought forth versus the depreciation that we currently operate under. But again, maintaining that balance of the ends of the pipeline infrastructure falling under 2945 allows for that ability for the operator to have a discussion with the tax levier and come to an agreement that works as far as not affecting the economics of the project direly.

And so I think the other— I think the point for all of this, one of the main points for the North Slope at least, is to maintain a level of stability as it ties to the revenue as far as the liability that could be had if you had an untested or unknown variable revenue source when it comes to being able to bond. And so I will hit on that a little bit later.

As I mentioned, the 2945 Title 29 implements a tax cap formula that applies to the North Slope Borough and to the Valdez Borough based on the TAPS valuation process. And so this is just our layout of essentially how we do our calculations based on inputs provided by the Department of Revenue, Department of Commerce. Department of Commerce does the population, Department of Revenue provides the full and true value, and then we have the electability to elect a mill rate. And so you could see 3/4 of the way down the page, we are electing at a 17.99 mill rate across the board for both 2945 and 4356 properties in the North Slope. And what's that— what that means is that the 2.01 mill rate is left as far as revenue to go to the state of Alaska.

And so I think if there was a discussion about the North Slope boroughs being greedy, If we were greedy, I'd take the other $2.01 mils, but that's not the case that we're in. And so, as I mentioned, we're willing to have a discussion and make a compromise that works for everybody. But I think informed consent is all something that we would all look for through that process, and that's what we're looking for is informed consent. So if there aren't any questions on the kind of the operating budget perspective and how we essentially are partners with the state of Alaska, then I would move on, Mr. Chairman. So page 13, this kind of gets into the debt and the stability concern.

If everything were to be AVT, we go to market with debt to pay for our infrastructure on an annual basis. Anywhere from $100 to $200 million a year, and it's backed by our revenue, but it's— the cost for that debt is very strongly dictated by our essentially one-trick pony in revenue. And so for a while, we were able to see really good bond ratings that translated into cheaper debt, and we're still in a good place, but I think protecting the, uh, stability, uh, for our revenue streams, uh, where, um, you would see liability when it came to an untested tax structure. Um, that, that's one of our concerns. Again, it's not a deal breaker, um, but it's something that we would like to look into to, to make sure that we're not jeopardizing our ability to build the infrastructure that otherwise could be requested to be borne by the state.

And so the other thing is that as we look at the industrial operators across the slope, whether it's on the east side by Point Thompson, which is the area we're talking about, Point Thompson, Bodomini, or moving westward into the Willow development, the Pantheon development to the south, any of our islands within 0 to 3 The other thing that I think we need to consider is the fair treatment of taxpayers and what that means to investors when they're looking at investing into a production that maybe isn't getting treated the same as its neighbor. I think going back to the discussion that was had earlier as far as the treatment of neighbors being equal. And so when you get into the details of the AKLNG, And we start talking about AVT, I think, and again, this isn't— I'm not lodging concerns for the purpose of stopping it. I'm lodging concerns for the purpose of being informed so that we know what we're getting into. And do I think it has to happen at the legislative level?

I don't think so. Can it happen at the local level? I think it can. It has before. The TAPS is a good example.

The, I guess, armistice on the Point Thompson valuation is a good example that we're not going to be fighting each other in appeals. And so if we look at some of the concerns that I have, at least as a tax levier, is does— where does AVT stop? Where do those treatments of valuation stop. Further upstream you go, you get into ring-fencing concerns, you get into the argument of definitions on what's incidental drilling expense, what's incidental drilling cost that don't count towards property taxes. And so there's a lot of unanswered questions that we would like more information on.

We understand that we need to get the project moving so we can help lift the burden from the rest of the state as far as the cost per kilowatt hour that's being felt. And so that's where we would ask that if we can have the GTP under $29.45, that enables the producer and the borough to get together, create a win-win-win, understand that it doesn't dire— direly harm the economics of the project, and move forward with something. Because at the end of the day, the way I look at it is that if I was on the steps of Congress talking in support of a project, it would be ideal. And I'll leave it at that. So the other thing that I think should be fleshed out, and again, it probably doesn't need to happen at this committee, but it should be asked about, is when we get to the tax cap formula and it dictates that you can only spend X on operating and the rest has to be on debt, There's some gray area right now as it stands as to whether payments in lieu of taxes count towards that tax cap formula revenue calculation.

Would the AVT count towards that? I don't know. I'd like to know because we manage the tax cap formula as we've seen an increase in operating costs. We max that out and have to shift cost to debt. And so Those are some things that I would like to have more general understanding on.

But again, it doesn't have to happen here. These are just some of the discussions that I think need to be had overall. I will say that as AGDC has worked to develop this project and going back a year and a half or two now when I got into office and started having these discussions discussions. I recognize the cost of living that has increased both in the Cook Inlet area and the rail belt, Fairbanks area, up and down the whole proposed project. One of the things that I asked about early on was what is it going to take to— from the gas treatment plant is about 60 miles to the community of Kaktovik, which is a diesel-reliant community.

From the haul road, where the pipeline is going to go by to the community of Unuktuivuk is about 80 miles. What's the cost to get a small spur line to those communities? And it's, well, anywhere from $150 to $200 million. Okay. What kind of contemplation is had for that added effect?

And it's like, well, we'll allow you— the AGDC will allow you to plug into the gas line, but it's going to be at your own expense. And it's like, okay, we can work that, right, because we see the projected revenue that we can use to hook up the other diesel-reliant communities. And as that discussion has come forward, you can see where it's at now, where if I was going to agree to a 90% reduction in tax, let's have that conversation. What— how can I make real change to the residents of my community, right? Because you got to recognize that the Prudhoe Bay area is an industrial area.

There's not a community aside from Nuxit, which is near, that stands to benefit by any other indirect way from this project. And so I'm left, as Peter— Mayor Machicki put it, we all have different problems in the different boroughs, we all have different sets of constituencies. I'm supposed to go back to my constituency and say there's a $46 to $60 billion gas project that we're not going to see a I'm going to get a cubic foot of gas from? That's a problem for me. Is there a way that I can have revenue that I can levy debt so that I can build my spur lines for?

That's fine, but I got to have the revenue. And so those are the kind of discussions that, you know, I think are important to have. I will stop there to take a little bit of Mayor Machicki's advice as to not negotiate at the mic, but those are things that I'm thinking about as we have this discussion about a tax package. I can move on if there aren't questions, Mr. Chair.

I have a question, Representative Stapp. Yeah, I think Co-Chair Foster, through Chair to Mayor Puppiduck, or it's probably a Mr. Rice question or a Mr. Imani question. You must have saw my diploma. Yeah, yeah, well, you know, we've been friends a long time. I'm giving you a pass there, buddy.

Now, okay, so this is the real rub here on this slide, right? So basically, we've had a lot of testimony on this kind of throughput methodology of the volumetric tax. Even Mayor Machicki a little bit ago suggested that he was the one who was behind the concept of volumetric. And when the developer talked to us and the committee and other individuals have testified multiple times that the biggest challenge with the property tax ad valorem structure is in the event that they have— it's a cost-based tax, right? So in the event that they have a cost overrun on a project, it's stacking a front-end cost on top of the the cost of the project, right?

Because the more expensive the pipeline, or rather the gas treatment plant is for you guys, the higher the valuation, i.e., the more the tax extraction. So they are pretty adamant that maintaining that structure effectively does not allow them to move forward on their investment decision. So that's kind of my first question. What is your counterargument to that? So just to summarize, I guess what your question is, is it's the instability for the tax burden on the gas treatment plant on the North Slope falling under 2945 or the entire project and that instability on cost overruns?

Because it's replacement cost new minus depreciation. Either or. Okay. So I think there's a way under 2945 to effectually get to the same number as far as your bottom line cost that a developer would pay to a municipality and there's a lot of flexibility there. And so if the goal was to get to a bottom line number, then based on the inputs and variabilities, all that's required is that the, the tax levier and the developer agree to those things.

And so I guess the counter would be, is there a problem having a producer accountable to the community that they're producing in? And so I think there's a way to get to there as far as the cost burden, but Those discussions have to happen. There has to be sharing of information so that we can have, again, informed consent on the project. If the finance wizards want to speak to anything, I'm fine with that. Mr. Limani.

Thank you, Mr. Chair, Representative Stapp. Thanks for that line of questioning. If I understand, your question is with respect to the current assessment process or methodology. That's been in existence for at least 5 decades now is to the extent that there's, uh, an assessment that's done, and generally that assessment is done as of the lien date, which is, uh, January 15th, whatever assessment or, um, uh, assets that are within the jurisdiction of the municipality is what would be assessed at that point in time.

Um, over time, as the project develops or matures new investment takes place is when that assessment is realized. It's not something that's realized on the front end, but it's amortized over a period of time as investments continue to be made in those fields. I think if I—. That was your question? I got a couple follow-ups.

Mr. Kucher. Rep. Sam Stahl. Yeah, thank you, Kucher, Foster. Um, I have to chair two wonderful borough folks. So we're going to continue on here the same slide regarding, uh, the argument is this AVT is novel to the United States.

It's a throughput-based tax structure, which probably is novel through other LNG projects, but the abatement concept, and really on global LNG projects, it is not a novel concept, right? A lot of foreign jurisdictions do use this type of throughput tax in their ability. So I'm curious what your thoughts are on that, and other than the ad valorem resistance What is the problem you have with a type of throughput-based tax structure? Mr. Chairman, thank you. Representative Stepp, I think I started the discussion on this page as to not necessarily having a problem with the AVT model on the pipeline.

And then for purposes of, I guess, fairness is a stretch. I mean, I'm not I'm not coming here tail between my legs asking for fairness necessarily, but when you have the liquefaction plant on the bottom end and the gas treatment plant on the top end, having them operate under 2945, I think, is a fair request. So I wouldn't say that this slide is consistent of points as to why it's a problem. It's more so speaking towards the unsurety that it brings. Brings to our exposure end of it, right?

So as far as looking at the rest of the United States projects versus other nations, we do have a little slide that kind of talks to a little bit of that later on that Mr. Rice can present on, unless he wants to chime in now. Mr. Rice.

Cody Rice for the record, through the chair, Representative Stepp. I'm not aware of any facility or project that has a truly volumetric-based tax, and I haven't heard anybody list one on the record. I think someone mentioned a pipeline in Azerbaijan. When I looked into that, it was a transit tax. It's not exactly the same thing.

I've had conversations personally with the county tax assessors in every jurisdiction for every U.S. LNG project with the exception of of Maryland, and when I talked to them about the volumetric tax, every single one of them said, "Oh, no. Don't do that." So I'm not here telling anyone what to do. I'm just saying this is a new concept and it's something that people should consider and it's something that we don't have a lot of precedent for and there are questions. Yes, follow-up, Mr. Kurcher.

Yes, thank you, Commissioner Foster, through Chair Mr. Rice. Yeah, I mean, I think, again, the AVT looks to be— well, I would say that's why I use the terminology throughput-based taxes, right? Those seem relatively common on these large-type LNG structure facilities. But I really— I guess my main question is here, obviously we have an issue between the developer and how they view their ability to get financing for their project. And you guys want to ensure that you obviously do right by all the wonderful folks up there and protect your own fiduciary interests, which is your job, to be honest, as representatives of North Slope Borough.

So my question is like, what is, what is the most equitable path forward here from your guys' perspective? How do we actually talk to the folks? Because obviously I'm an Interior guy and I got a spur line in the spill. So there's a lot of value there for me. But I also want to make sure that, you know, the folks who live where all the oil and gas is, are, you know, brought into the fold here and help move the state forward.

To the chair. Thank you, uh, Mr. Chairman, through the chair, Representative Stapp, uh, for the questioning. Um, and we get to that a little bit later. Uh, the last few slides speak to, um, what, what works, right? Because I, I think, as I stated in the beginning, the goal is to get, uh, the project to a point where it can get reached FID.

Right? Um, we share that goal. Now there's, uh, precedent issues that we have, there's unsurity issues that we have, but there's ways to get past those things. Um, and, and what the, the 2945 on the GTP would do, it would enable, um, uh, the buck stopping at the, uh, the producer, the state, and the North Slope Borough, um, at an administrative level. And I think that, that information sharing and understanding is important, and we'll get to that later in the slide.

And so I think my goal here is— because you talk about the fiduciary— I do have a fiduciary responsibility. I mean, I mentioned it earlier. I can't go back home and say, you know, they ask, Mr. Mayor, what's the deal on AK LNG? I say, well, we lost all of our property taxes and we have no gas going to any of our communities, so there's that. I can't go home and say that.

I mean, it doesn't matter how much I like you or how much you like me, I'm sorry, it doesn't work. And so I guess what I'm saying is I want to become a partner in making this project a success.

I want to help advocate for it, but if my back's pushed against the wall to choose between having to deliver that message that I just talked about versus being an advocate for it, the answer is pretty simple. You don't have to be a scholar to see that answer. So I want ways for the North Slope Borough to get behind this project. And it's not ways for purposes of killing it. It's ways for purposes of being able to be a respected negotiator in the process, right?

Because I don't blame, I guess, the approach, right? I mean, is it easier to bring on board a community of 10,000 people that only has one— has, quote unquote, one vote in the House and in the Senate? Or is it easier to just go and get the rest of the votes from the House and the Senate to not have to talk to the community of 10,000 people? I don't understand that approach. And I don't think that it should be enabled, right?

I mean, we have 5 decades of making things work on the North Slope, and I'd like to continue that. So thanks. Okay. Representative Hannon. Thank you, Co-Chair Foster.

Mayor Pektuk, repeat the distances for the 2 spur lines in your borough that you mentioned, Kaktovik and Anaktuvik, please. Thank you. Through the chair, Representative Hannon, thank you. Roughly from the Badami-Point Thompson area is about 60 miles to Kaktovik, which is a border, or well, I guess that 60 miles consists of ANWR. And so kind of what our idea is as far as being that good faith partner is that if there's a way to get a utility corridor through ANWR into Kaktovik, really to change the lives of the residents of Kaktovik who are diesel reliant, then we'd be interested in that and we would lead in getting that utility corridor.

The other one is Unaktuvuk Pass. It's inland, right kind of near Galbraith Lake, right on the middle of the Brooks Range. And that one's about realistically 90 miles of pipe. It's probably 60 straight miles, but it's mountainous terrain. I've actually snowmachined from the highway to Unaktuvuk, and it took me about 98 miles of snowmachining.

So those would be the considerations in distances. Follow-up. Has your team— the spur line in Fairbanks is spelled out specifically in the bill. We've heard it Price talked about, some of that being the size and dimensions of it. Your spur lines you're mentioning, it's the first I've heard of those two specific ones being an interest of the borough.

They're longer distances than the Fairbanks one. Have you priced out what either of them would cost to do? Other than— through the chair, Representative Hannon— not specifically. I think other than Just taking the work that we've done from Alpine to Nooksut and then ramping it up because there is an existing infrastructure. There's already oil pipelines between Alpine and Nooksut, so we just essentially tack the garden hose to that.

Projecting that out, we estimate $150-200 million. When we spoke to AGDC about this a year and a half ago or so, I think agreement was made to essentially put the T in the pipeline where we would like to plug in, but after that it would be our responsibility. And so again, we left that conversation thinking, fine. I mean, if we're talking about a $40 billion project, there's going to be revenues to offset the cost to build that. So we haven't got a finite number, I guess.

Okay. Detailed number, I should say. Thank you. Okay, Representative Josephson. Thank you, Mr. Chairman.

Mayor Puckertuck, the concept of having your own spurs, that wouldn't satisfy the western communities of Tigeyak, Point Lay, and Wainwright, correct? Those would still be stranded in that respect. Mr.—. Well, I guess you're chair too, so you can give me the floor. Mr. Chairman, Representative Josephson.

Mr. Thompson, thank you for the line of questioning. You are correct that, again, 6 of the 8 communities are diesel reliant. That's Point Lay, Point Hope, Wainwright, and Atkisook on the west side. Barrow is natural gas from the Navy. Nuiqsut is natural gas from Alpine.

And then Kaktovik is diesel on the east side. Unaktuvuk is diesel in the Brooks Range. And so it wouldn't satisfy the needs of Point Lay, Point Hope, Wainwright, and Atkisook. But remember again, and I think this is why I was important to talk about the overall budget of the borough. We do our own version of PCE across all of those communities.

So if the cost to provide power and heat in one or two communities went down, that would make more assets available to effectively change the cost of living in those other communities. So there's a lot of detail to answering that question, but—. At the risk of saying any of the quiet part out loud, which which Mayor Machicki alluded to, in order to tease out a project or induce economic behavior, has anyone ever approached you about supporting abatement in the early years, but on a relatively short timeframe, certainly when the full GDP is built out, restoring a goodly amount of your previous revenue. Mr. Chair, through the chair, Representative Josephson, I think the next few slides kind of speak to the differences between existing property tax structure, what's proposed in HB 381, what's proposed in HB 2001.

I will say that those are based on inputs that are publicly available and I couldn't tell you that I necessarily believe those numbers other than the yellow column. So I think you'll hear a little bit about it in the next few slides. Okay. Moving on. Representative Bynum.

Oh, sorry. Thank you, Co-Chair Foster, through the Chair. Mayor, thank you for being here. One of the questions I've been asking a lot of the other borough mayors has been about community impact. Aside from the opportunity for additional revenues from the potential taxation of these assets, what specific community impacts do you see happening in the North Slope Borough?

Thank you. And then what do you think it would take to make those impacts, from a financial perspective, make the borough whole for those impacts? Thank you, Mr. Chairman. Thank you, Representative Bynum, for the line of questioning. The list is probably not as ready as I'd like it to be, but there's 3 things off the top of my head.

We, again, we subsidize the utility to industry for those that we don't grant grandfathering rights to because we have the certificate of convenience for water wastewater production. And so there'd be an increase in water wastewater production. I don't know what that cost would be. We would, we would probably have to look at, and we currently are looking at, on existing throughput through the water, wastewater, the cost per unit change, but then understanding the CAPEX is up front. The same applies to the dump in Prudhoe, which we recently got to look at because of the drill rig that fell over.

We were wondering if the owner of the drill rig would want to put it in the borough's dump and what kind of added cost we would have to put on that based on filling up a cell. We are in the middle of a consent decree with the Environmental Protection Agency across the slope based on hazardous waste management, ericracites, et cetera. And so we do know that there are increases in costs for opening cells in dumps, but we have the useful life of the Prudhoe Bay cell, I think, another 3 or 4 years out before we have to kind of make an investment decision on opening the cells. So there's that added use in the area that, again, we would split between offsetting that impact directly or through the volume used on that utility. The other thing that is real interesting that, you know, I don't even have the details detailed answer to, but I do know that it's an issue, is that the community of Nuuksuit shares the airshed with all of the producers in the area, and we are currently in— because we run the power generation plant in Nuuksuit, we are currently— our production into the airshed, essentially pollution into the airshed, is breaching the entirety of the airshed, and so we have to make more energy-efficient power generation investments into the power generation plant in Newark City.

Again, that's probably indirect, way down the line, but if there's a big demand on the airshed, what does that do for the residents' cost, the borough's cost to pollute the airshed also? So there's those costs, you know, there's associations of emergency services. We do have the police force in Prudhoe Bay that is all in our jurisdiction. We do do environmental inspections all along the Haul Road, so if there are spills that happen, the North Slope Borough is involved. We permit everything in the North Slope and make sure there's community engagement and proper interpretation of state laws as those permits get promulgated.

So there are a lot of different impacts. Again, the Prudhoe Bay area is more industrial area than it is a residential area, with the exception of Nooksit. So— Appreciate that. Okay. Follow-up for Senator Bynum.

Thank you, Co-Chair Foster. Through the Chair, I appreciate that. I think it It would be interesting to know what, you know, as we move into the future, exactly what those impacts would be. Because I know that they are looking at putting aside that— setting aside an impact fund and then asking the boroughs to quantify those expenses to be reimbursed. But the second thing that had come up through this committee hearing was specifically talking about this idea of a spur line to two nearby communities.

50 Miles, 80 miles, something like that. Has there been any previous discussion about what that would take to make that happen? Because I know, you know, we're talking about relatively small communities as far as population size, and trying to get through the EPA environmental and all that of actually putting in a spur line would be, I think, a very large capital-intensive project for the populations that we're trying to feed. So I wasn't sure if that's actually been looked at and are there alternatives? For example, just running power lines to those communities and keeping the generation at Prudhoe.

Mr. Chairman, thank you. Representative Bynum for the line of questioning. A lot there. I think the last time that major legislation was considered regarding the gas line that involved the North Slopes participation was in the 2013 timeframe. I graduated high school in 2012.

I'm not sure if there was contemplation for spur lines to Qaktovik and Nunaktuvuk during that time, but we could definitely revisit that discussion. I think more recently we've looked at consolidated power generation in a natural gas source and then running HVDC out to those communities.

I can't remember the number. I think it was to get to Barrow. Was like, uh, $9 or $10 billion or something like that to run the load out with the line loss, etc. Um, and, and so, uh, the, the other point that I think you're, you're hitting on as far as what it would take to get a spur line out there, one of the things that we're learning more about is the, uh, process in which the federal government, um, permits things, uh, using the new FAST-41, um, I guess regime. And we're confident, based on other things that we've worked on, the Department of Interior with community winter access trails, which require a federal permit, other things that require federal permits, that we can work pretty diligently with those organizations with the understanding that the borough is the owner, because we have certain considerations under the National Petroleum Reserve Production Acts that say that there shall be, um, deference given to the North Shore Borough for community economic development projects for permitting, because we're surrounded by, um, petroleum reserves and wildlife refuges, right?

And so that, that ownership of the borough gives a little bit of deference versus just an industry-type operator coming in looking for a permit in the region. So, um, I think to shortly answer it, it would be easier that the borough permitted it than anyone else permitted it. Thank you. Okay. Please, Representative Ballard.

Thank you. I kind of don't know where to begin. So, Mayor, I have known you a little bit. We have worked together. And I don't know if I am reading the room wrong or if I am reading the state wrong.

I feel like being up here through the co-chair, I feel like being up here, I have heard you negotiating. We know everybody is listening. So I don't know that you took Machicki— Mayor Machicki's advice or not. So I have a few questions. Your actual borough budget is— what is it again?

I don't know. That other page, I think it said $545,000. $559,000 Or something like that. Yeah, $595,000, yes. And that's for about approximately just over 10,000 individuals.

I know the municipality is about $660,000, looking at my notes, for operational, and then municipality Anchorage, sorry, and then $105,000 for our capital budget. And I'm bringing that up because I don't see the North Slope Borough as being poor, right? I see that it's a good stable borough, and I'm just trying to figure out that with, um, your yearly revenue, why do you have— or why aren't you asking, why is there so much debt within the borough? Can you explain? And I'm going to lead into some other questions, if you don't mind.

Sure. Mr. Chair, thank you, Mr. Chairman, Representative Vallard, for the line of questioning. Um, no, I wouldn't claim that the North Slope Borough is poor by any standard. Um, I think as part of the first part of the presentation Trying to communicate where the borough provides services which otherwise the state would.

Again, there's not a state-maintained roadway in the North Slope borough aside from whatever's in the industry area. I can go back and relist the same things that I talked about as far as other services that we provide that otherwise the state would and what that represents on an annual budget, at least with a rough estimate of that $200 million or so. And then as far as the second part of your question, why we're in debt, it speaks to the Title 29 requirement, which is the tax cap formula that essentially says between the North Slope Borough and Valdez, if you guys elect to levy a range of mill rate, here's your modifier. Maybe put up that budget, page 12. So looking at column C, that's where you see our multiplier.

We wait for the state's full and true value, and then once you elect 17.99, I think the range is between 16 to 18 mils, you have X modifier. If it's between 14 and 16, you have a lower modifier. And so that's why we are poised to rely on debt for major maintenance versus operating dollars. Thank you. May I follow up?

Thank you. So, um, I wanted to do a correction. I think that Representative Bynum asked, and you had stated about dump fees earlier, those are going to be paid for by the contractor. So I don't— so the North Slope Borough is not going to have to worry about those. And I think you said that that would be included of some sort of Go ahead.

Mr. Chairman, thank you, Mr. Chairman, Representative Ellwood, for the follow-up. That is true that there is a unit cost tied to— I believe it is tonnage now that we do on waste generated. But the CAPEX cost for any kind of expansion in an increase in waste would be bore by those unit bases. And so then you would get into the discussion of— when I was on the utility board, as a not-for-profit, you would run it as a cost, cost, cost payer type of discussion. And so we would have to look at if the burn rate, essentially, of a cell and expenses of those cells increased by X over the course of 10 years, who is the majority contributor to that, and then how do we make sure that there's fair rates applied to all the waste contributors.

And so But at the end of the day, the CAPEX cost is borne by the borough and then recovered partially through rates. Okay. May I co-chair? Representative Mallard. Okay.

Thank you. So I wrote here on my notes and the Hall Road—. Let's see here. It says—.

So the closest community to the North Slope borough or to the pipeline, so the closest community to the pipeline is about 50 miles. Is that an accurate statement? Probably 60. Okay. And then the Hall Road is maintained by the state.

And then under the former bill, the ask was $200 million for what you were wanting the North Slope Borough to achieve. Was it less or more than that?

Mr. Chair, I guess just a clarifying question. Do you mean under the current bill that left House resources or the bill that was originally produced by the administration? I think it was the bill that was originally produced by the administration. So was it $200 million?

Well, that's a complex question to answer. On the next slide, slide 15, we talk about some of the different revenues associated with the different tax packages. So is the ask now $229 million? Is that where we're at? Are you— what are you actually asking for the North Slope for all?

Do you want your team to answer that? Because it looks like, you know, I mean, Mr. Chairman, with all— thank you, Representative Vallad. I, I don't think, um, the dollar amount is necessarily the ask. It's the structure in which we get to the dollar amount, right? Right now it's being—.

Okay. But I'm just— I think the public wants to know. I know that you're in a very powerful position right now, and I understand that, and you are leading the charge on the negotiations. I get it. It's the North Slope.

I understand that's where the oil and the pipeline and everything's going to come from there. I'm just working my way to saying, are 'Cause I'm hearing you, I'm hearing the words you're using, and I'm hearing what you're saying on public record. So my concern is that if the North Slope doesn't get what they want, they're just gonna shut this project down. I know you said earlier that's not true, but I'm hearing differently. And I represent Eagle River, right?

Mm-hmm. So I have to stand up for them too. So I'm just trying to figure out, Where are you at? I want to know as being a finance. I want to know as being an Alaskan.

Where are you at, Mayor? Thank you, Mr. Chairman. Thank you, Representative Ballard. Yeah, I— sorry about that. My intent, as I stated, is not to shut the project down.

The borough has, as any iteration of contemplation of the of this project, the borough has been part and parcel in building something that works for everybody.

Earlier I referenced the 2013 effort that was put forward. I believe the bill signing might have happened in Barrow under that governor and that mayor at that time, because there was close collaboration in trying to get this across the line. And so my goal is not to become an obstacle, but it's not— It's also not to negotiate on an open mic. I think the ability for us to have a better understanding— us meaning the North Slope Borough— have a better understanding of the different implications across all things, whether it's the ecology, the environment, the finances, the investment, the demand on services. There needs to be probably a non-disclosure sharing of information so that we can get to that point.

And as I mentioned before and I think I have shown here, we are not obstructionists when it comes to development projects. We like to be informed, though. And so I don't think we have gotten to that point. So I hope that answers your question, I guess, to the degree that I can without moving on to the other slides that kind of talk to the dollar amounts. I just have one last follow-up or comment.

So I guess what I'm trying to look for is that right now the North Slope borough is basically asking for 43% of the revenue from the pipeline. That's what I'm seeing in all the slides, everything that's coming forth, more than— and I think the rest of the state would divvy up the rest.

My question is, though, I want to hear you and make sure the communities and every Alaskan hears you. So they know that you're positively wanting this to go forward. If— because I heard you say want a lot, and I'm an I, and I'm just trying to figure out, are we as Alaskans going to do what it takes? And the North Slope Borough mayor and your constituents that you represent to make this happen so that my children and grandchildren and your grandchildren have a pipeline in place? Mr. Chairman, Representative Ballard, thank you.

I started the presentation with the recognition that we have a responsibility to get this resource to market and to residents of the state. I believe that. I, when I say I, because I can only speak for myself, at least in this room, believe that there's a way to get there. With some of the stuff that we're proposing. And the idea that we wouldn't be able to find a solution that worked under 2945, whoever's spreading that idea, whoever you're talking to, since you referenced the folks that are talking to you, I'd like to hear where they heard that from, because I don't think they heard it from me or my team as far as our unwillingness to to work collectively, respectfully, to getting this project through under the different contemplations of tax packages that are before the legislature as a whole, not necessarily incorporated in HB 381.

So if it's a mixture of AVT, 2945, PILT format under 4356 or 2945, or anything else, let's have those discussions and let's have those variables understood so that I can look out for— again, I can look out for the North Slope borough's stability, I guess, moving forward. So I hope that helps. Yeah. Last comment. Just comment.

So I hear you saying yes, you're going to do whatever it takes to make this project go forward for the good of all Alaskans. Mr. Chairman, thank you. Representative Ballard, uh, yeah, I, I don't think that, um, again, we're not going to be an obstacle, but, uh, is there a way that we can get to, to keep dignity and respect intact, get to, uh, informed consent? And has that been the route so far? Okay, then I just heard no.

I mean, I'm just asking for a solid answer, yes or no. Are we going to do whatever it takes to make sure all Alaskans are represented well to the point where we all benefit from the pipeline and not shut down the project. I think that's—. My goal isn't to shut down the project, if that's the question. Yeah.

Representative Sharagi and then Gelvin. Representative Sharagi. Yeah, thank you, Co-Chair Foster. Mayor Puckertuck, good to have you here. Good to see you again.

It's been a while. I don't know that I have so much a question as much of a comment. Or maybe it can be taken as a question and you can agree or disagree with my perspective. But what I hear you saying is largely what I think the state is saying, which is that we want to see our resources brought to market and we want to see this pipeline develop, but only if it's in the financial best interest of our local communities. And I think that's true whether it's the state, and I think it's true on the North Slope borough, that you want to make sure that whatever structure is implemented, that it's equitable and recognizes the needs that your community has, just as I think the state wants to make sure that if we move forward with a gas line, that it's done so in an equitable way and that it provides for our citizenry.

I think through our prior hearings, we've heard that there are iterations of this that could not be in our best financial interest, and we all want to protect against those, those outcomes that could erode our financial position or, or our ownership position. In terms of these resources. Is that kind of an accurate— are we really aligned actually, in fact, in wanting to make sure that when we move forward with this, which I think we all want to do, that it's done so in a way that's equitable and recognizes the needs we have in our communities? Thank you, Representative and Co-Chairman, for the question. I think, generally speaking, I'm in agreement with that statement.

I think the other thing that that the North Slope Borough at least is intimately aware of anytime we look at projects, because we have been looking at the economics of projects for 50 years, is that there is more than the dollar value that is tied to it. There is the— how would you put it— kind of the intrinsic value and added value of just having access to the resource, whether it is a dollar value or or not. And I think that's where I find the need to work together to get this project done is because, you know, the constituents that you represent directly as a district, there's a need for getting cheap, sustainable, reliable gas so that you guys can have good reliable power at a cost per kilowatt-hour that's not terrible, right? And so in addition to the revenue cost discussion, dollar amount discussion, I think there's just that intrinsic value that we need to— the added value, I guess, the moral obligation value that's tied to it too. So one follow-up, if I may switch here, Josephson.

Follow-up. Thank you. Not touched on as much, but a question that I have that I'd like you to address I want to address is, you know, this question of more disclosure from Glenfarm and others in terms of the financials behind this project has come up repeatedly. We want more information in order to be able to find a path forward that works for everyone. Would you agree that that's necessary in this process, that we have more transparency from the developers in order for us to make sure that we are getting a fair shake out of this development project?

Mr. Chairman, thank you, Representative Sharagi. I'm not going to go on a limb to speak on behalf of what I think is fair for the legislature. I think that's for you guys to decide. But as far as the borough goes, and in all the industrial development that we've had in the North Slope, as recent as the Willow development, the Pika development, going back to the '80s with Uhuru Island, North Star Island, man-made investment any, any CapEx spent on the Point Thompson development to get gas to truck to Fairbanks, or even just for the operations in Prudhoe, the DR&R investment for shutting down some of these 50-year-old sites. We've been willingly, by the, by the producer and owner, made aware of what the plan is.

We expect to spend this much in capex. We expect to have a drilling season that goes and explores X amount of wells. Hey, we're having challenges at the federal level because wells and pads are being reduced based on what our plan is. What do you think, North Slope Borough? And so I think the discussion of transparency to what level is important.

Should all of these numbers be discussed?

On the public record with the legislature, that's for the legislature to decide. As far as the investment that's being made in our region, we would like to know. If that means that we have to sign an NDA, if we have to, you know, hand to God something, then so be it. But getting to that level of informed consent, I think, is where— to Representative Stapp's question earlier— I have a fiduciary responsibility to do that. So.

If I may, just one last comment. Representative Schrag. Yeah, I think just to hone in on that a little bit more. I'm not necessarily advocating for full disclosure of all the numbers to the legislature. I think there are other ways in order to have that discussion and to get that information or at least to have confidence around the project economics whether it's through DOR or DNR or otherwise.

But the more information, the more disclosure, the more transparency currency, the more confidence we have in the project economics, makes it easier for your entity, for the North Slope Borough, to get to a place where you're comfortable with this project. Is that accurate? Yeah, Mr. Chairman, um, I guess in response to that, yes. And, and I think that's where the ability that's allowed under 2945 for a producer to negotiate directly with a municipality is where we would find that. Um, and, and right now as it stands Under the call on the legislature, part of what is contemplated is that there isn't anything 2945 on the North Slope or 4356 for that matter.

So could there be a way— you know, I think one of the other things to consider under the AVT model is, are there established appeal processes? Like there are appeal processes under 4356. Section 256, where there's an adjudication of the cost inputs, right? Because, I mean, I love, I love oil and gas folks, and I love municipalities and governments just like everyone else. Can you trust every number that they put into their filing?

There's, there's a process established that allows for that checking, checks and balances on the numbers. And again, we're not trying to be unfair in the dealings. We just need some type of involvement in the community. Thank you. Okay.

I would like to recognize that we also have Representative Diepert joined us. Thanks for joining us. And we have got Representative Stepp. Thank you, Co-Chair Foster.

Glad you said all that with all those folks right behind you in the room there. I am curious regarding the—. I didn't know who was behind me. Regarding the other developers. I'm just curious, you guys are surrounded by producers and developers up there.

Has anyone ever approached you and said, hey, we need some sort of relief or abatement to a project in your time as mayor, through the chair? Short answer is no. Historically, has anyone ever said we need some sort of property tax relief, to your knowledge? Follow-up, Co-Chair? Through the Chairman, Representative, to my knowledge, no.

Yeah, so this is—. Follow-up, Mr. Co-Chair. Makes sense, yeah. So this is kind of a novel aspect of you guys then. I mean, and, you know, like I said, I think by your statements here on the record today, you look like you are very willing to compromise to try to make this project happen.

But I just want to put on the public record, I can't in my mind think about a project that has been done up there where you guys have had to give up a big share of your, you know, property tax ad valorem valuation. Is that correct? Through the chair.

Mr. Chairman, Representative Seth, to my knowledge, that is correct. Again, through the SARB process under 4356, we have the ability to appeal to evaluation or not. So that's kind of the— you know, we're not going to fight you on this one. Okay. I thought Mr.

Kocher would follow up. So if If nothing were to change in the current law and they built this project anyways— we've established that they won't, by the way, previous testimony— what would— what is the amount of revenue the North Slope would stand to gain, basically, at, say, 20 mils? Because I mentioned earlier, revenue is modeling this at 20 mils. I don't think that you guys would negotiate that, otherwise why would you have a negotiation clause in the bill or ask for that through the chair? Mr. Chairman, Representative Stapp, as we get into the numbers, we have some slides dedicated based on the information that's available at $46.3 billion build price, etc.

We have some graphs that kind of speak to that, but I guess just to answer the philosophical policy question that you're asking aside from the numbers is do we think the project gets built under current tax structure? No. Do we want the project built? Yes. Does that mean that the tax structure needs to change?

Yes. Are we on board with that? Yes. All right. Thanks.

Okay. And I think I don't see any further questions. Moving on to the next slide. Thank you, Mr. Chairman. So page 15, again, this is based on information available to us publicly.

We haven't gotten any information I guess, that would otherwise be shared under an NDA or other things. And even if we did, we wouldn't be putting them in slide deck. But this is essentially an overview of how we see and estimate the revenue structures based on the different tax packages that are being proposed. And so specific to the North Slope Borough, you'll see the yellow column at $9 billion over the course of the project. That assumes a 17.99 mil rate.

The 2.01 leftover that the state would take in revenue is under the State of Alaska's yellow column. Under the blue or— is it magenta? Is that the blue color? I don't know. But under the blue, the light blue, that is an assumption of the GTP at 17.99, which would be valued under 2945, which is is the current version of this bill.

And then it's the pipe at 6 cents under the AVT model. Under the SB 2001, again, going to the sentiment of the co-chair that that's subject on the call, that's 6 cents AVT per pipe, 12 cents for the GTP on the North Slope, and then 12 cents for the GTP in the liquefaction plant in Key 9. So I would say under my, um, ask, which we'll get to a little later, is that we operate under the magenta, but with the understanding of that GTP under 2945, I think we recognize it's not going to be palpable at the 17.99 mil rate, right? And then for all the other questions that I've posed before, once we negotiated under 2945, would that quote-unquote PILT be subject to property tax cap formula, all those other things. And so I would say under— I guess in this case, worst-case scenario, under the magenta, we would be levying at $17.99 million under the 2945 powers.

Obviously that number would go down as we negotiated either a mill rate equivalent dollar amount or a mill rate exactly. But to the point that Representative Stat made earlier, as cost overruns happen Investors need that surety. So how do we get to a dollar amount under $29.45 versus maybe a negotiated lower mill rate? So if there are questions about kind of the inputs, don't be surprised. I didn't put this bar graph together.

Cody did, and he can answer any other variables that may be of question.

Please proceed. Okay. Uh, with this one, uh, again, I don't want folks to think that I'm bringing these questions or comparisons out for the purposes of obstruction. I'm legitimately just asking these questions and making these comparisons so that we can talk about folks' needs of legislation. So with that, I'll pitch to Mr. Rice to carry this one.

Mr. Rice. Cody Rice, for the record.

For the committee, I think the mayor covered it quite well, and I think the idea that we had with these slides is there's been a lot of discussion about the taxes in Alaska being an order of magnitude higher than in other jurisdictions, which isn't exactly true. Um, and so as an economist, when you look at the actual tax paid, whether it's the nominal headline rate in Alaska, that would be 20 mills, or whether that's the nominal mill rate in Louisiana or Texas, the nominal rates are not that different from Alaska. Um, After adjusting for some other factors like the fact that Louisiana doesn't tax at 100% of full market value, so their mill rates look much higher than Alaska's, but when you adjust for the percentage that they actually tax, it's quite comparable. And so I think the idea was that it's important for everyone to be talking from the same numbers, from the same reasonable assumptions. We can have different perspectives, different interpretations, but the facts are the facts.

And the fact of the matter is the nominal tax rates for property tax on LNG facilities in the United States are comparable to the nominal rate in Alaska, particularly when you take into effect the fact that we have already granted a substantial tax concession for the LNG project in the fact that the Kenai LNG facility, the liquefaction facility, does not pay state corporate— or does not pay state property tax. When you look at the value of that over the project life on average, that takes us from a $20 mil project to around $14.6 mils to start with. And that's an important piece of information for the legislature and others to understand as a basis for proceeding and having a conversation about what a reasonable deal looks like, what a durable deal looks like. The way that these concessions work in Texas and Louisiana, and I think the basis for the order of magnitude claims, is that it is accurate that Texas and Louisiana and Maryland incentivize these projects heavily, often with an 80 to 90% tax abatement for a period of time. So it's important to understand that a temporary tax abatement to, say, 2 or 3 or 6 mils is not the same as a permanent tax reduction to something similar in Alaska.

So the idea of these slides is just to put that out there and let people understand the facts as they are. And the fact of the matter is these are temporary concessions that are offered in Texas and Louisiana. Typically with a 10-year term. In some cases, there is a 5-year extension. In many cases, there are things that are not covered.

For example, in Texas, the land is not abated. The school districts often tax separately, and those can be a local choice. And these are things that Glenfarm is very aware of as an investor.

Any questions on these? Yes, Representative Bynum. Thank you, Co-Chair Foster. Through the chair, thank you. So one of the things that I am looking at when I think of them from a municipal perspective or the borough perspective, when we are charging our property taxes, we are looking at charging those taxes for provided services within our borough.

And we've heard talk about cost of schools, roads, other things. There's many boroughs around the state that they only charge a property tax. Anchorage is one of them. I believe we can look up at Fairbanks as another place where we're looking at purely property tax. There's no sales tax to support the local entities.

And when I'm looking down at Louisiana and Texas, we're talking about applied property taxes or a mill rate. Those taxes are going to provide for services within those communities. So I think about that, and I'm looking at what we're talking about here on our midstream property— property tax on the midstream infrastructure that we're building. We're seeing what are we doing to collect those taxes for actual cost to the citizens. And when, as an example, when I look at the North Slope Borough, we look at The property taxes that are currently being charged to infrastructure and industry, mostly the oil industry right now, it's about $50,000 per capita basis versus when we look at other parts of the state, we can look at what's happening in the Kenai under this plan and those per capita property taxes or mill rate applied, that drops way down.

I mean, we're talking about $1,000 per resident. Resident. Don't know that for exact, exact number, but you get the proportions I'm talking about. So how, how, when we're talking about somewhere like Texas and Louisiana where we're talking about a per capita charge for the property tax that's applied that then is then supporting those services, how are we trying to make this apples-to-apples comparison when we're talking about North Slope for all? So, uh, Mr. Chairman, Representative Bynum, for the line of questioning, and I'll pitch to Cody here shortly.

But I think to understand why I'm looking at this information, why I'm considering it, is because I think we have an intimate understanding. And typically we say oil and gas projects, right, on the North Slope. That's what we've been doing for the last 50 years.

It's been alleged that oil economics and gas economics are different, and I think I agree with that, but I didn't know at first, right? And so then I began this kind of broader nationwide understanding of what is the difference between the economics of an oil project versus a gas project. And that's why I've asked for this information from my team to get to the informed consent kind of discussion that I was talking about as far as, OK, if we know we need to get a gas line developed, at what rate do we need to either abate, holiday, or remove the taxes altogether? And that forced me kind of on a broader search for where these— what different levers are used to get to that economics decision by a producer. And so with that, I guess directly to your —question.

Cody, if you want to—. I think—. Mr. Rice.

Through the chair, Representative Bynum, I mean, I think that's a good question. I'm not sure anyone has the answer to. It sounds like, if I understand your question correctly, you're asking about how property taxes may or may not be directly related to costs. And I think one of the points that I might offer the committee is that there's been a fair amount of work done on this by the Municipal Advisory Group and by other iterations of the gas pipeline over the years. But I think that it's very difficult for communities, for the legislature, and for others to predict what those costs are.

I mean, I think Representative Tomaszewski lived through this and could say that in Fairbanks, before TAPS, did they estimate the costs correctly and fully in terms of what the impacts on the community would be? I think the answer is no. What impacts will happen in communities that aren't within the right-of-way? You know, what impacts will happen in your community? I don't know.

And I'm not sure that thinking about property tax on a per capita basis and that it needs to necessarily directly offset costs is a way that everyone shares of looking at those factors. I mean, I think it's a fair question. Thank you, Representative. Go ahead, Mr. Chair.

Thank you. Uh, and Representative Bynum, you— thank you, Mr. Chairman. Sorry, uh, Representative Bynum, you mentioned, uh, sales tax and how that's tied into things. I will note that the North Slope Borough used to levy a borough-wide sales tax. We quit that in 1991 at request of industry.

To rather get to a more simpler, less paperwork burdensome PILT arrangement that just allowed for a one-time annual payment, which I think underlines our willingness to work with industry partners to create win-win-win situations. So. Representative Bynum. Thank you. So earlier Representative Stapp was asking these questions about trying to make a correlation between what current industry is doing doing on the slope and whether or not there's been ask for concessions on property taxes.

I'm trying to, in my mind, with the answer that was given, correlate that to this project because I think what we're talking about here is a large distribution gas project. We don't currently have that on the slope that I'm aware of. All of our assets are oil that we're utilizing. And we've agreed, and I think we do agree, that How we monetize the, uh, oil is very different than how we're going to monetize the gas and, and what, what kind of margins we have, um, within the, the, um, the product that we're getting and putting out to market and the ability for us to invest in the infrastructure necessary to bring it to market, uh, but specifically bring it to Alaskans and affordable energy to Alaskans as a whole. And I think from my perspective, and correct me if I'm wrong, there is this disconnect between what's happening on the North Slope of being able to monetize that gas for the benefit of North Slope residents versus bringing low-cost energy to, uh, the rail belt system, uh, Fairbanks and Anchorage.

We know that there's a gas shortage looming and we know that energy costs are going to be going up. Um, so I think that there definitely was an there's an apples to oranges comparison here. It's not an apples to apples. So with that being said, I'm just wondering if you would— if you were looking at the taxation treatment that we're putting on the midstream component, which is the transportation basically of the gas, versus the upstream component, which is the producers on the slope, if you do see that there's a difference in the tax treatment that we would have. And I think what I heard you say was that there is, but we're not sure what that number is going to be.

And so first, I just kind of get this idea. Do you think that we should be treating this midstream delivery component differently? And if so, how do you think that that would impact the upstream developers, if at all?

Mr. Chairman. Mayor Pachutek. Thank you, Mr. Chairman, Representative Bynum, for the line of questioning. I don't know. You need inputs and variables to kind of judge different models to make that decision, and those are inputs and variables that we don't have.

I guess just to the broader discussion, as far as apples and oranges, I recognize it's apples and oranges. We recognize that. We recognize that there needs to be a different framework around the way in which we treat a gas project versus an oil project. That's an acknowledgment.

And then it's left to decide what does that framework look like. And then you back that up against the situation that you all are in as far as the timeline in which, uh, the rest of the recipients of the gas up and down the pipeline need that relief for gas. And what I'm proposing is, versus fixing all the different variables at the tax structure level without the information from the inputs on how that tax structure looks, what I'm saying is I think it'd be more effective to allow that negotiation to happen between the borough and the producer so that we can get to that, you know, the trading of information, get to a— oh, we understand a lot more now. Maybe we need to have a dollar value equivalent of a mill rate of 6, 8, 10, I don't know. And those are things that are allowed under 2941.

45. So I hope that— I guess we're not going to have clarity and answers to questions based on the fact that we have exposure to the same data between the legislature and the borough. So thank you. I'm just going to take a brief at ease. We're supposed to have a meeting at 4:30.

I know we also have 4 producers that are also online. Line. Uh, we're going to try to figure out whether or not we're going to let them, uh, come back later or if we're going to try to get to them today. Uh, so we'll take a brief at ease at 4:16 PM.

Okay, House Finance back on record. A couple of announcements here. I'm wondering if we do have our 4:30 meeting, if we think that we could power through another slide, that would be great. If not, we could see if there are any questions, but we do have 4:30. 4:30 Meeting.

We think it might be a short meeting, so our plan is to step out for a few minutes and just go into our meeting here. And then if folks— there's an expression by the producers, the 4 producers that we have, they would like to try to power through. I think they have, rather than come back in the next few days, they have, it sounds like, some trips out east that are planned, and so they would prefer to power through tonight. And so we'll get through the North Slope Borough's presentation, then go to the producers. But with that said, if we wanted to maybe jump into the next slide, and then we'll take an at ease for hopefully no more than half an hour.

So with that, Mayor Puckettuck. Thank you, Mr. Chairman. Considering the time crunch that we are— have been on, I would just point your folks to slide 19 where it kind of just talks about the reasoning for all the different levers as to why we think that we should go down that road. I think we've kind of beat that to death as far as the assurances from an AVT model not bleeding into upstream assets, et cetera. And then having clear bright lines on where the AVT model and costs associated to that at the discounted tax rate would end.

Is it at the field that we're considering, Point Thompson? Are there other natural gas opportunities that would then feed into this potential gas line that we hope gets built? And what kind of treatment do they get? Do they stay under 4356 like we would like Point Thompson to? Those kind of considerations.

And, and so that's what you'll see in '19 and '20. And then in '21, it just continues to underline the borough's partnership with the state of Alaska. In the last 38 years, if we— as we've operated under the different mill rate levies, we've essentially left $1.1 billion on the table, which doesn't seem like a lot from a House Finance Committee committee that might pass a $7 to $10 billion budget, but from the borough's perspective, it represents in today's dollars about the equivalent of 10% of our operating budgets over the time. And so this concept that we are maximum levy, I think, is not informed. And so with that, Mr. Chairman, again, I thank you for the time, members of the committee.

Thank you for the time. Thank you for the indulgence. I think my time in the legislature has showed me that I need to present full transparency, kind of my perspective on things. And then hopefully in, in that back and forth discussion, I can learn something from other folks' perspectives. And I would say that I've accomplished that here, learning more about the other perspectives that you all have, but we're not daft, I guess, to the situation that the rest of the state is in, and we want to be an enabler in order to get that done.

And at the end of the day, like I mentioned, if I can be the number one cheerleader on a national level of getting this project done, I'd love to do that. So with that being said, we are complete, Mr. Chairman. Thank you for your time. Thank you very much, Mayor Pukkatauk. We appreciate your coming down to give us your perspective.

I think a lot of good questions were asked and pretty thorough, I think, discussion. So appreciate your being here. So as I mentioned earlier, we're going to go ahead and take an at-ease, hopefully for no more than 30 minutes. There's a meeting that we just need to be at, and then we do have the 4 producers, and that is ExxonMobil, Pantheon, Hilcorp, and Conoco. We had asked if maybe there was any interest in them coming back on Monday, but it sounds like they also have some conflicts, so we're going to try to power through.

Sounds like the next presentation from Exxon should be pretty short in our discussion with them, so we might be able to move fairly quickly through the other invited testifiers. So with that, we're going to Take a, uh, at ease at 4:29 PM.

Okay, I am going to go ahead and call this meeting of the House Finance Committee back to order. The time is currently 5:16 PM. I appreciate the patience from some of our invited testifiers, especially folks in Texas there. I know probably then— I think it's probably, I'm guessing, 2 hours later here. And so appreciate you sticking around.

And so next up, we do have Mr. Todd Griffith, the president of ExxonMobil Alaska. And Mr. Griffith, thanks for joining us. I see you on the overhead here, and if you'd like to introduce yourself and, and just give us your thoughts.

Very good. Can you hear me okay? We can hear you great. Thank you. Wonderful.

Well, good evening, Mr. Chairman and members of the House Finance Committee. For the record, my name is Todd Griffith, and I am president of ExxonMobil Alaska, which means I'm responsible for the North Sea float natural gas sales for my company. So I know, as we've mentioned to both this legislature and legislatures before, my company is and has been willing to continue to make gas available, uh, to any project really, as long as we can meet mutually agreeable and commercially reasonable terms. So to that end, over the last many years.

We've entered into several agreements to sell gas. We've executed a gas sale precedent agreement with AGDC several years ago. We currently sell gas on the North Slope to Santos to power the pickle oil unit, which has recently started up. And also, as has been announced earlier this year by Glenfarn, we entered into a gas sale precedent agreement for the Alaska LNG Phase 1 project, and that gas will be supplied from the Point Thompson Unit.

You know, while of course that agreement is covered under confidentiality, so I can't comment on specific gas sale terms, but I absolutely can confirm that the precedent agreement addresses both price and volumes. So I just really, in, in my short opening remarks, uh, in closing, I just want to say, you know, we're working to help make the AK LNG project successful, and we're looking forward to progressing the GSPA for the gas sale agreement with Glenfarm for Phase 1, and then begin negotiating additional agreements for Phase 2. So I would just say, you know, we're really looking forward to progress of the project. And, you know, if the project is completed, it will help both the state of Alaska and my company. So with that, I can— happy to take any questions that you have.

Okay, thank you very much. And I am looking to the committee to see if we have any questions. I believe— let me just check the It looks like we also have Representative Sharagi online. Representative Sharagi, do you have any questions?

And let's see here, I'm looking at the table, I don't see— we do have a question, Representative Tomaszewski, and then Galvin. Representative Tomaszewski. Thank you, Co-Chair Foster. Thank you for being here today. You said you had gas agreements in both price and volume.

Is that just Phase 1 or Phase 2? Could you specify that? Through the chair. Yes, Representative, that's for Phase 1. For Phase 1.

Okay. Thank you, sir. Representative Galvin. Frank, ask again. Okay.

Okay. Mr. Griffith, thank you very much for being online and we'll go to the next person. So thank you. Next up, we have Pantheon Resources, Mr. Patrick Patrick Galvin, General Counsel and Chief Commercial Officer. And then also online, we have Mr. Eric Kruemenaeker, and he is the Chief Development Officer.

And if you could both please put yourselves on the record and give us your thoughts. Thank you, Mr. Chairman. For the record, my name is Patrick Galvin, Chief Commercial Officer and General Counsel for Pantheon Resources and Great Bear Pantheon. Great Bear Pantheon. And Eric, why don't you go ahead and put yourself on the record?

Yes. Thank you, Mr. Chair. For the record, Eric Krumenacher, Chief Development Officer for Great Bear Pantheon. Thank you.

We appreciate the opportunity to come here and talk. We actually were hoping that we would be first because we were the first ones to sign a gas precedent agreement with 8 Star and we feel that that act, which was almost exactly 2 years ago, served as an important catalyst to really get this project going, particularly the concept of a Phase 1 project, which is really the one that our gas is particularly useful for.

I greatly appreciate the opportunity to talk to you about our project and Great Bear Pantheon, Pantheon Resources in general. This is the first time really we've had a chance and probably most of your terms other than a couple of you, to talk about who we are. We keep a low profile on purpose, and as we move through this, I'm going to cover a lot of ground in a very short period of time because of the time constraint. So just open the opportunity to come back and cover any of the areas that we aren't able to cover in detail today. Day.

Before I move off this slide, just want to note because it's a great opportunity to capture one of our primary points, which is one of the things that distinguishes our project from any other new development project is our location. As you can see on this particular photo, in the foreground is our W-pad, that's the W-well being drilled. Last year. And just behind that, you can see in the distance our Maigres pad. Both of them are connected by short driveways to the Dalton Highway that you can see cutting across the screen.

We're about 20 miles south of Deadhorse. And just on the far side of the Dalton Highway that you can't see because it's buried is the Trans-Alaska Pipeline. Cuts right through our acreage. And so this will be one of the themes of the presentation is our proximity to that infrastructure. Just standard disclaimer about what we say because we're a publicly listed company.

A little bit of history.

Great Bear Pantheon is the successor to the original company called Great Bear Petroleum. The project has been going now for 16 years. Over that time, hundreds of millions of dollars have been spent to explore in an area that previously hadn't had really much of any exploration on the North Slope. As you can see from the series of maps on the top, our project is located directly south of Prudhoe Bay and Kuparuk. We have currently— we are holding 258,000 acres of state land.

So all of the area that we operate on is owned by the state. We are quite a distance to the east is ANWR, which is about 30 miles to the east. To the west is NPRRA, which is about 25 miles to the west. No federal land within our project area, which is a significant advantage for us as well.

Over the time we have shot on our own, over 1,000 square miles of 3D seismic, which gives an ability to see what's in our area really that nobody else had previously had and has been a great advantage for us. Over the project life, we've drilled 8 individual wells and made significant discoveries.

And then, as noted, we have signed a gas sale precedent agreement with 8Star. Our project is an oil project, but we are going to be producing a significant amount of gas along with it. And the gas that we have already discovered is enough to fulfill the needs of Phase 1. And we believe that because of the nature of our gas, low CO2, doesn't need a gas treatment facility on the North Slope, it provides an opportunity to provide Phase 1 gas at a much lower price. And because we have not yet invested in gas handling costs that the North Slope producers currently use, we can provide that gas at a much lower price than what the other producers would need to charge.

So again, quickly, 15 years. As I mentioned, Great Bear Petroleum was the predecessor, was the first entrant, and picked up a significant amount of leases targeting what was known as a source rock play to go directly into the shale. Directly where the oil is produced, very tight rock, uses techniques that are used in the lower 48, the shale plays that we all hear about, and was saying, well, why don't we go after the source rocks that produced all the oil that ended up in Prudhoe Bay and Kipar. We drilled 2 wells early on that were stratigraphic test wells, just take core samples out of the ground.

To make sure that our models were correct and that the oil should be within our acreage position. It quickly became apparent that a shale or source rock play wasn't going to work within the economics of the North Slope, and the company pivoted towards looking for more conventional reservoirs, not where the oil is produced, but where it migrates into better rock. And so we, we're shooting 3D seismic over the next few years to get that picture over our acreage position, and we drilled one exploration well in 2015 into one of those conventional plays, our Alkaid 1 well. We had a— we'll call it a pause during a period when the tax credits weren't being paid back. We were leveraged on our credit facilities, and we weren't able to attract any capital to to do any additional work in that period.

In 2019, Pantheon Resources, a publicly traded company on the London AIM Stock Exchange, acquired the Great Bear assets and allowed the project to separate from that tax credit debt and allowed that predecessor entity to basically become a shareholder of Pantheon. And the project could move forward and attract the capital needed to begin activity again. We quickly reentered the Alkaid 1 well that had been drilled in 2015 and tested it and proved that there was oil there. That was then succeeded in the next few years with a series of discoveries across our acreage position that has resulted in a significant, uh, proved resource within our acreage position. Position.

And I'll just note that we have two primary project areas, one called Kodiak, which is out to the west of the highway, which has the largest of the resource base of oil and gas potential. Along the road system, we have our Apun project, which is attractive primarily because being right up against the road, we have the ability to move quickly from an appraisal into actual production. On our Alkaid 1 pad, we have our— our Alkaid 2 well, but our Alkaid pad, we already have processing facilities that we put in place for a long-term test, and those are available to quickly become part of an initial production project.

In 2025, we drilled 2 wells to look into other areas. The Magrez well that I showed you on the initial photo was looking at a new area that right now isn't going to pan out immediately. It's going to be a longer-term project. And we drilled the W-PAT, the W well that you saw. That one we had to suspend the test because of the cost of the water handling.

We're going to get back at it. We're planning to do that later either this year or next. So where do we go from here? Again, we've got this huge resource base. We've got the opportunity to reprocess our seismic, get a better look at what we have available to us in our Kodiak project.

And we intend to drill another well, a delineation well, into the updip portion of the Kodiak project. We have the ability to go back into Alkaid, as I mentioned, with the facilities in place and do another test to perfect that production technique. And we're also going to reset the Dubby test and determine if we're able to make a project in that area work in the near term. Um.

In terms of size, just to give you a sense, we've got from multiple independent experts, they have determined we have 3 billion barrels of oil equivalent that's recoverable within our acreage position. That's a huge amount in scale. And just want to make sure that you're cognizant that this is a big project.

As I mentioned, we are right on the road. The opportunity for a timeline that is completely different than what you have seen with Willow and Pika and the projects that have had to put in place a significant amount of infrastructure just to get to the project area. We are sitting right on top of the Trans-Alaska Pipeline, right on top of the Dalton Highway.

Because we are on state land, because we are not in a sensitive biological diverse area, we can move through the permitting process at a much quicker pace than what you have seen with the other projects in the more sensitive areas in the federal lands to our east or our west. The gas sale precedent agreement gives us the opportunity to provide gas as— really as quickly as the project can get going, the gas line project. And we intend to be there with that project as they move into their initial phase. And, and we believe that we would be the best choice for the gas for the Phase 1 project. And then finally, I'll just note that we have moved as a company from being an exploration company to being a development company, meaning that the question no longer is whether The oil is there.

Is this a, a geologic question of whether the oil is there? That one's been answered. The oil is there. Now it becomes more of an engineering question. What is the way to get the oil out of the rocks in the most economically efficient manner?

And so with that, we have evolved our management team starting with our board of directors. We have a board of directors that's much more focused on Alaska, Alaska experience, and the technical ability to get the oil out of the reservoirs we've discovered. And I'll just point out that our newest board member is Dave Wilkins, who many folks would know as the former president of Hilcorp Alaska. And so he has a lot of experience with getting oil out of the reservoirs in Alaska and is going to be a very important part of our management team going forward. Also, a little over a year ago, Max Easley joined us as our chief executive officer.

Max is a native-born Alaskan. I think he has his jersey hanging in the rafters at West High as a former star quarterback. Uh, he began his career as a petroleum engineer on the North Slope. Learning how things are produced in Alaska, and then was moved to different fields around the world and gained the expertise of how oil is produced in the modern oil fields. His most recent job was Chief Operating Officer for Petronas in Western Canada, where he was responsible for all of the production that resulted in 1.3 billion cubic feet a day of gas going into the Canada LNG project.

So he is quite familiar with the things that are needed in order for our project to be relevant and, and successful in the context of the Alaska environment. Uh, we've added, uh, Terlisa as our chief financial officer with experience both in in terms of corporate governance for a company that's going to be growing as we will need to grow, and the fundraising as a public entity to, to bring the project about. And then I'll point out our most recent addition is Vance Hazard as Senior Vice President of Operations. Vance has a wealth of experience both in Alaska and around the world in the type of development that's needed to make our type of reservoirs produce. And most recently, he was the head of drilling and completion for Santos up here as they moved into the first production at, at Pica before moving over to our project.

And then finally, I'll just note that the head of our technical team, Chief Development Officer, is Eric Krumenacher. And before I turn it over to him, I'll just note that Eric as well has significant worldwide experience bringing projects from the exploration phase into development and production. And he will use that experience on the Alaska assets. And I think when I— I'll turn it over to him now to both introduce himself a little bit more, but also to talk about the type of project that we're going to be bringing forward and how it differentiates from what you guys have all heard about from Prudhoe Bay into the park and how they're developed. So Eric, why don't I turn it over to you and you can put yourself back on the record and take it to the next slide.

Mr. Krumenacher. Yes, thank you, Mr. Chair. For the record, Eric Krumenacher, Chief Development Officer for Great Bear Pantheon.

Good evening, everyone. As Pat alluded, I started my career more than 30 years ago in Alaska as an engineer for Prudhoe Bay. And since then, I've had the privilege to work on many types of oil reservoirs around the world, and I'm actually ecstatic to return back to my roots here in Alaska and having joined Great Pantheon about a year ago. So super excited to be involved. So I'd like to start this conversation differentiating what the Great Bear Pantheon fields are like relative to some of the ones that are more familiar by starting the conversation in the upper right, the picture on the upper right.

This shows a simplified picture of oil and gas reservoirs that the North Slope of Alaska is known Prudhoe Bay, Copper River, Pika, many others. And before I studied oil and gas, I thought of oil reservoirs as an underground cave filled with oil, instead of the rock that has pore space that's filled with fluids and connections between those spaces, allowing the fluids to flow. And that ability for the fluid to flow is measured through permeability. And in fields like Prudhoe, permeability is high, and the fluids can move freely. And because the gas is lighter than oil, which is lighter than water, you end up with the gas cap on top.

And if the gas cap is present, sometimes it's not, and with the oil below it, and there's also typically a large water volume below it, many times larger than the gas or oil volume. So in order to maximize the value development of those oil fields, secondary recovery or tertiary recovery, it's also referred to as enhanced oil recovery, EOR, is employed. Fluid. And secondary recovery involves injecting the water below the oil, injecting the gas above the oil to maintain the pressure and push or displace the oil in the production wells. And tertiary recovery, or EOR, involves injecting compounds that change the properties of those fluids to get a bit more hydrocarbons from those rocks.

And those techniques have proven to deliver tremendous value in large fields with higher permeability. You can see a gas producer on there. I've I put it in gray on this slide, and that's to indicate that really in these fields, when there is oil, that's where the focus is. You wouldn't naturally produce from the gas cap because ultimately the oil has the highest intrinsic value for development because it's much easier to produce. But later in life, you'll want to produce those gas resources most likely, but that is if there's a way to get them to market.

Now I'd like to move over to the upper left picture. In this diagram, where primary recovery is used, these are typically smaller oil fields or ones with heavy oil. And these reservoirs, the rock is still effective at allowing the fluids to flow, but the investments required to enable secondary recovery, or EOR, are not commercial. Just an example, when I say heavy oil, think of the way that honey flows. That's kind of similar to an oil gravity of 10, may be referred to as 10 API oil.

If you look quickly at the little table on the lower right, you can see oil gravity numbers. For some key fields in Alaska, lower numbers represent the heavier, more viscous oil. I mentioned 10, which does exist up there, but Prudhoe Bay and Kuparuk are in the mid-20s. Kind of for analogy, that's more like maybe a maple syrup type of viscosity. Great Bear Pantheon oil is lighter.

It's up to about 40, 35 to 40 API. It's more like vegetable oil in the way it flows. I wouldn't think of the color of vegetable oil though because it is black oil, not to be confused with something that might be lighter like a condensate. The table on the lower right also shows gas-oil ratios quantifying how much gas is dissolved in the oil. The analogy I like to use for gas-oil ratio is the CO2 gas that's dissolved in a bottle of cola.

However, one big difference, oil can absorb up to about 50 times as much gas as water. So trying to imagine 50 times the carbonation in your soda gives us a sense of what— how much gas there might be, particularly these high GORs. And I'd also just like to note that the GOR, the amount of gas, can vary widely depending on the composition of the fluids and the pressures. But you can see the numbers, you know, higher GOR is definitely in our crudes. And so therefore, we do have a lot of associated gas.

So just quickly going back up to the upper left, referring back to that picture. In primary recovery, when the oil is produced, the pressure drops. This results in, one, the gas cap expands, two, influx of the water aquifer, and three, solution gas dissolves in the oil. And this is that's dissolved in the oil expands and breaks out of solution. This all drives oil to the producers and offsets some of the pressure drop.

So in these reservoirs, there's not always a gas cap initially, but typically, as the pressure drops, a secondary gas cap will often form, created by the gas that comes out of the oil. I like to think of this— if you think of a 2-liter bottle of cola, after you've poured a glass and tighten the lid back on, you actually notice the pressure is back up. Essentially, that gas cap kind of fills, fills the space in that bottle. So those fields, the ones you see traditionally on the slope, but now I'd like to focus on something that's a little bit different and describes what Pantheon's assets are. So this tight oil, we'll focus on this lower left picture.

This is a situation where rock has low permeability and the fluid doesn't really flow naturally. And this is how the Great Bear Pantheon assets differ from the typical North Slope oil reservoir that most people are familiar with. The rock in these reservoirs are well below 1 mDarc versus a number of around 500 mDarc or more in Prudhoe Bay. So that's a difference of more than 3 orders of magnitude. Trying to move through— or a fluid through these rocks is like trying to use— analogy I use— It's like trying to use a stick of chalk as a straw to drink your cola using a straw.

It's really, really hard and nearly impossible. The fluids just don't move. So the effective way to access the hydrocarbons in these fields is through drilling long horizontal wells with multiple-stage fracture stimulations. This allows the wells to access large areas of rock. The solution gas then drives the oil into that fractured network allowing the wells to produce.

And this type of development has been very successful in places like the Permian in the lower 48 and also in the Montney in Canada. In both those places, the gas pipelines and the related LNG projects support the export of the associated gas, and they're in fact dependent on these tight oilfield developments. As Pat described earlier, we at Great Bear Pantheon have wells we've already drilled and wells that are shut in today that have existing well potential. And we can deliver additional oil production within the next 18 months, and we have a plan to do that. On the North Slope, without an export option, the primary alternative for the gas is reinjection or sales to consumer for power generation— kind of an emerging option.

But gas reinjection itself requires significant additional capital costs. For one, drilling additional wells for gas injection. Two, installing gas compression facilities. And three, generating power to drive the compression. The, the Alaska Gas Pipeline will enable Great Bear Pantheon assets to generate additional value through diverting investment from those gas reinjection facilities and wells instead to further reservoir development.

And particularly drilling additional production wells that would not be commercial otherwise. So this enables an increase in our ultimate oil recovery from the fields, which ultimately also creates jobs, benefits the state of Alaska through royalties, and at the same time offers low-cost gas for Alaskans that would otherwise be stranded up in the north. So with that, through the chair, Representative, uh, Mr. Foster, I'd like to hand it back to Pat for the Gas President Agreement we have in place. Okay. Mr. Galvin.

Sure. Again, Pat Galvin.

The Gas President Agreement, as I mentioned earlier, we signed 2 years ago. One of the— it was the result of really a conversation between us and the folks at AGDC. So at that time, Glenfarm wasn't part of the picture. AGDC was looking at how to both get their project moving, but also how to address the emerging issue with the gas shortage in South Central. And one of the difficulties was finding a supply that they could actually say they had available and at a price that they could build economic models around.

So there was a opportunity for a win-win between us and the gas line project where we were willing because of the reasons that Eric just mentioned. Gas for us right now, absent everything else, is going to be a cost factor. The fact that we are producing this gas along with the oil, we're selling the oil, but the gas we're going to have to spend a lot of money in order to put the facilities in place to dispose of it.

If the gas pipeline comes online, we're able to avoid those costs and we're able to sell the gas at a much cheaper rate than the others who have had to make huge investments in gas handling equipment. So the timing couldn't be better, where we're able to avoid that cost the cost would, under the current structure, would both burden our project in terms of attracting investors, but it would also ultimately cost the state in terms of we would deduct it from our oil tax calculation and the state would ultimately pay for it as well through reduced oil taxes. So there was an opportunity for both of us to come together and We were able to sign the gas sale precedent agreement. Our project, as I alluded to, has a significant resource base. AGDC hired their own independent consultant, Ryder Scott, to evaluate our independent consultant who had done their work and looked at our actual well logs and such and were able to confirm that we had sufficient gas producible to support the in-state need for the Phase 1 project.

In addition, for us, just to note it, our Kodiak project has a particular unique feature. It was a surprise to us when our Theta West well results came back, but there's a lot of helium in our production, a lot more than expected. And it's just a unique feature of where we happen to sit geologically. And that helium, if we have a gas pipeline, could be quite valuable to us and to the state. So we just want to note that as a side product that is unique to our project as well.

And as I mentioned, one of the biggest factors is the fact that our our gas naturally has very low CO2 content, less than 1%, which means that contrary to the other projects, as you've all heard, needs a gas treatment plant in order to bring that CO2 content down to a level that is sufficient for the pipeline. And so that provides us, again, that opportunity to provide low-cost gas to both both the project and ultimately through Phase 1 of the Project to Alaskans. So that concludes our prepared materials. I'm happy to answer questions. Great.

Thank you very much. We've got questions from Representative Tomaszewski, Bynum, and Allard. Representative Tomaszewski. Thank you, Co-Chair Foster. Through the Chair, Mr. Galvin, thank you for being here.

You were talking earlier in your presentation about permits and that you were very close to the Dalton Highway and a little simpler process to get those particular permits.

Can you describe which permits you have and which permits that you need to get? Well, the primary permits that are going to be associated with a development project, at least the long lead time ones, are going to be putting gravel down on the tundra.

Historically, there is a designation that pretty much all of the North Slope, other than a few unique locations, are designated both wetlands and have been considered waters of the United States, which meant that pretty much any gravel that you placed on the North Slope would require a permit from the Army Corps of Engineers. That is a bit in flux. The U.S. Supreme Court issued a decision that has caused question about how to interpret what is considered waters of the U.S. But we would expect that in a development scenario for us, we would have to get an Army Corps permit for at least some portion of the gravel. And as a result, we would need to get an EIS.

And so that's our— probably our longest lead time item. Is to go through the NEPA review that would be associated with it. If we are able to keep our project fairly discreet in terms of the gravel footprint because of the nature of our wells or the location in proximity to the Dalton, then we may be able to avoid a full EIS and just do it under an EA, but that's something that will be determined later on. And then the, the second long lead time item is going to be air permit. And the air permitting is one that is fully dependent upon the, the nature and capacity of your facilities.

And interestingly, the, the role of the gas pipeline will play a part in that. If we have to install significant compressors and generators to power those compressors, that results in the possibility more emissions. And that creates a bigger air permitting hurdle. If there's a gas pipeline in which we're able to move that gas down, then we may come under a much less time-intensive, much less onerous air permitting issue just because we won't have the emissions. And so those are our two longest lead time items.

We'll be working obviously with Department of Natural Resources because it's state-owned land, but that process is fairly, you know, constrained within those— within the federal timelines. The federal timelines are going to be the drivers. Okay. A follow-up. Follow-up.

So do you have a gas— offtake order? Do you have a gas offtake order from Alaska Oil and Gas Conservation Commission already in possession then, or—. For the reasons that Eric just alluded to, that wouldn't be relevant to us. The gas offtake order is associated with the— if you take gas out, you run the risk of stranding oil. And so they want to maintain that pressure on the— if you remember the slide that Eric was talking about.

For us, our gas is coming with the oil. And so there's no offtake to get an authorization for. It's just coming with the production. And so we're not— the gas isn't driving oil production. We're producing it with the oil.

Okay. Follow-up. Follow-up. Okay. So that's interesting.

So you're going to be producing— I mean, are you guys— you're going to be producing— producing the oil and the gas at the same time. Correct. Because— And we want—. I guess the main important thing is we will not have to reinject the gas for the purpose of enhancing our oil recovery. And therefore, there isn't a need to get authorization to divert that gas towards a sale because AOGCC will be like, go for it.

It's just less gas to have to inject for storage. Okay. Thank you. Okay. Representative Bynum.

Thank you, Co-Chair Foster, through the Chair. Mr. Galvin, thank you for being here and your presentation.

So today we're really talking about the bill in front of us, which is about a property tax treatment. And I was just wanting your thoughts on first the bill and the property tax issue that's in front of us, and then also how you think that that might be different for being an upstream developer versus the midstream component of this project, and what your thoughts are on the proposed property tax alternative. Well, I think—. I guess fortunately for us, the bill doesn't really have an effect on us other than we just want it to to make sure that it allows for a project to go forward. Our gas is going to be sold at the price that we agreed to.

It's not going to be a netback, so the impact of the tax on the pipeline tariff doesn't roll back to us. We kind of start the valuation process and it rolls forward. And so, as far as the structure of the The bill from a Great Bear Pantheon perspective, we're sort of agnostic. You guys figure it out and make sure that the project is able to go forward. Thank you.

Representative Ballard. I was going to make a wishful thinking, but that's fine. So when are you guys going to go into, through the co-chair, final investment decision? That will come about depending upon the outcome of our next our next few activities. We have to basically be able to demonstrate the ability to economically produce out of our reservoir.

Once we have that, then we're able to design the facilities, establish the development case, and then get the financing to make that final investment decision. Okay. Okay. Thank you. Thank you.

And that's—. And then Eric, alluded to earlier that basically from our timeline is going to be very different than the other projects that you see on the North Slope. Okay. Where from our— that sort of prove-up well to actual production is going to be as short as 12 to 18 months, just because we've got facilities, we're there, and through various means we can shorten that timeline.

And so our timeline really has been— continued to be set to try to stay in pace with the Phase 1 of the project. All right. Okay. Thank you, Co-Chair. Okay.

Thank you very much, Mr. Galvin. Thank you, Mr. Krumenacher, for your invited testimony. Appreciate your being online and available. Next up, we are going to go over to Hilcorp Alaska. We've got Senior Vice President of Hilcorp Alaska, Mr. Luke Sojay.

And if you could put yourself on the record and thank you for coming in to give us your thoughts. Sure. So co-chairs Foster Josephson and I guess I understand Representative Schraggy is online. Members of the House Committee. Thank you.

Thanks for the invitation to appear before you today. My name is Luke Sauget. I'm the Senior Vice President for Hilcorp Alaska. In this capacity, I oversee all of Hilcorp Alaska's operations and commercial activities across the state, including both the North Slope and the Cook Inlet.

So I don't have a cool—. Slide show, but I'm going to go with my prepared statement, if that's okay. So we appreciate the opportunity to provide insight into the gas sale precedent agreements that we've signed with Glenfarn, as well as our ongoing discussions. It's important to say up front that these are confidential gas sale— I'm going to call them GSPAs. The GSPAs are confidential, so, you know, probably can't share a whole lot about what's in them.

As you heard from the other North Slope operators today, the testimony is necessarily limited in scope due to the ongoing nature of our negotiations and the related confidentiality. So with that context, we appreciate—Hillcorp appreciates the opportunity to share our perspective on the future development of Alaska's North Slope natural gas resources and the roles— the role these resources can play in strengthening Alaska's long-term energy security. Hilcorp shares the excitement expressed by many Alaskans in regarding the ongoing partnership between the State of Alaska and Glenfarm to Alaska— the advance the Alaska LNG Pipeline project. Bringing Alaska's stranded North Slope gas resources to market is a critical component of the state long-term energy future and one that Hilcorp looks forward to continuing to support as a long-term supplier of North Slope natural gas. Since the announcement of the State of Alaska and Glenfarn partnership, Hilcorp has been engaged in steady and constructive discussions with Glenfarn regarding potential gas supply agreements.

As many members of the committee may be aware, Hilcorp has focused its commercial efforts on gas resources from fields that we operate and control and that can readily and efficiently deploy gas into the project. It's also important to note, based on the gas makeup of the North Slope, it is highly likely that a vast majority of Phase 1 and Phase 2 gas will come from Hilcorp-operated fields.

And I think I'll take a little bit of a sidebar.

At the risk of being redundant, you know, when we drill— when we drill wells on the North Slope, all of our commercial activity up there is justified based on selling one product, and of course that's oil, right? There's only a market for oil. But we also make very large quantities in pretty much every well of water and natural gas. And so as, uh, the gentleman from Great Bear said, there's a cost to deal with these other products, water and natural gas, right? So the water, we have to separate the oil from the water, separate the water from the gas.

We sell the oil. We re-inject the water back into the reservoir where it helps to maintain the pressure. And we also re-inject that natural gas. So the natural gas has to be piped around the slope, compressed up to fairly high pressures, and re-injected back into the reservoir. And some of the natural gas we use as fuel to run the various fields.

Um, uh, the gentleman from Exxon referenced how Exxon is selling natural gas to Santos to run the PICA project. So there's extensive gas, uh, infrastructure on the North Slope already. There are pipe— we call them flow lines, pipelines, however you want to call it— to transport the gas. There's some of the largest compression in the entire country to compress and re-inject that gas. So every day in Hilcorp-operated fields, we handle, compress, and re-inject 9 billion cubic feet of gas.

So for reference, Phase 2 of the Alaska Gas Line Project is talking about moving 3.5 billion cubic feet of gas down this new gas pipeline. So we're already compressing— handling, compressing, and re-injecting almost 3 times that much. I think somebody said earlier, that's as much gas as Germany uses in a day, right? So it's— we're handling a lot of gas already, and we have already a fairly extensive existing gas infrastructure on the North Slope that we've invested in over, you know, decades and decades, right? And every well that we drill requires, you know, some form of additional gas handling capacity already.

So let's see. Um, for Phase 1, and I guess we've always approached this saying that we want to, you know, work out agreements for Phase 1 and then we'll move on to Phase 2. Um, for Phase 1, our discussions have centered around potential gas supply from assets such as Northstar, Endicott, and Point Thompson. And, you know, we're excited to talk about Point Thompson. We've spent, uh, $180 million over the last couple of years It's far and away the most expensive single well that Hilcorp has ever drilled.

We've drilled and completed the first new well at Point Thompson in over a decade. We'll be bringing that well online here in the next couple of weeks, and that'll basically double the total production rate of Point Thompson. We're pretty excited about the future of Point Thompson. Consistent with these efforts, not just at Point Thompson, but kind of commercially across the slope, Hillcorp into— Hillcorp entered into a Phase 1 gas sale precedent agreement with Glenfarn on January 22nd. Uh, this executed GSPA is for gas from the North Star unit, and we continue to work toward finalizing a similar agreement for Point Thompson Gas in the near future.

As I publicly stated upon signing that agreement, Hillcorp is pleased to partner with Glenfarn to advance this critical energy infrastructure Project, entering into this Phase 1 gas sale precedent agreement is an important step toward moving North Slope gas to market and delivering reliable energy to in-state customers while helping address the ongoing decline in Cook Inlet gas supplies. Hilcorp is proud to serve as an anchor gas supplier, committing early volumes at competitive terms to help move this project forward. Market predictability supported by a stable and consistent regulatory and fiscal environment remain essential to all aspects of our operations in Alaska, including this project. Hilcorp views this, this agreement, the GSPA, as an important early step in the ongoing development of a Phase 1 project. We remain open to continued discussions regarding future gas supply volumes at commercially reasonable terms as project phasing, commercial structures, and investment decisions continue to evolve.

At the same time, Hilcorp remains firmly committed to continuing to invest heavily in Cook Inlet in meeting our contractual obligations to Southcentral Alaska utilities and customers. Earlier this month, I met with a number, uh, of members of this committee in Juneau to provide an update on Cook Inlet gas supplies and Hilcorp's ongoing activities. And I, I think that, uh, remains important today. Over the last several years, Hilcorp has completed some of the busiest drilling and investment seasons in Cook Inlet history, Every year, you know, recently we've been investing $400 to $500 million to develop new gas supplies for Southcentral Alaska. And we continue to push, you know, to have more activity as fast as we can.

We are fully developing our Cook Inlet leasehold and will continue working to meet our existing contractual commitments. We are confident we will deliver on the contractual commitments we've made. However, despite those investments and development efforts, Cook Inlet production continues to decline. Hilcorp and others have been communicating to utilities and policymakers for several years that Southcentral Alaska will eventually need to identify and develop new long-term gas supplies. That time is now.

Um, by our own internal modeling, Southcentral Alaska will almost certainly need new gas supplies brought to market by the end of 2029. So I think that's worth repeating. We are going to fulfill all of the contractual commitments we've made, but the market wants more gas. And if there's not some new source of gas by 2029, by the end of 2029, there's not going to be enough to go around. Cook Inlet remains critically important to Alaska's energy system today, but the long-term future of large-scale natural gas supply for Alaska ultimately lies on the North Slope.

That reality is one of the reasons Hilcorp believes advancing an Alaska LNG project is so important, both for future in-state energy security and for broader long-term economic— long-term economic opportunities for Alaska. Hilcorp appreciates the committee's continued engagement on Alaska's energy future and looks We look forward to working collaboratively with policymakers, the state of Alaska, and project partners to advance solutions that are durable, market-based, and beneficial for Alaskans over the long term. That concludes my testimony. Thank you. Great.

Thank you very much. We do have a question. Representative Tomaszewski. Thank you, Co-chair Foster. Through the chair, thank you for being here.

Really, you know, looking over the the last many, many years that Hilcorp's been in Alaska. Really impressed with the way they have efficiently utilized all these different fields and really increased production on all those that you've done here in Alaska. I'm going to ask you the same question that I asked Mr. Galvin about the offtake, gas offtake orders. Do you have gas offtake orders for Northstar, Endicott, and Point Topson? Through the chair, Representative Tomaszewski, I think you're referring to the, like, basically the permission from AOGCC to take gas off of the fields?

Yes. Yes, and we do. And in fact, I think AOGCC kind of put out a position paper on that some time ago around the major fields on the North Slope, including all of the fields that we operate, saying that in their view, it was, you know, beneficial to sell that gas. Okay. Follow-up.

Follow-up. And so do you have any other permits or issues or any other— anything else that you need before you're able to sell this gas, other than just the basic infrastructure and a gas line? Through the chair, Representative, the way— I don't think I breach any confidentiality of our GSPAs when I say this. You know, the way that we've structured our agreements is we say we will sell you gas at the point where we have it. So you lay your pipeline to our compression plant and we put it in your pipeline.

So the short answer to your question is no, we don't need anything else. It's fairly minimal. On our part.

Okay, thank you. Representative Pannen. Thank you, uh, Co-Chair Foster. Mr. Sojay, are any of your gas precedent agreements for Phase 2, or are they all for Phase 1? Through the chair, uh, Representative, they are all for Phase 1.

Uh, we are entirely willing to work on Phase 2. We just want to get through Phase 1 first. Not— we want to finish all of our agreements for Phase 1 first. Follow-up. Follow-up.

And I apologize for my ignorance because you're a professional in this field, but so the 3 producers who've described tonight all have indicated they have precedent agreements for Phase 1. Great Bear Pantheon included in theirs a volume that looks like it completely meets our Phase 1 demand. So what happens when 3 or perhaps the 4th will indicate the same? We have 4 producers who already have agreements to sell more than we need. Does everybody take a cut, or that's part of the agreements?

There's some pecking order already established in there that if Great Bear Pantheon gets there first and fills the need, then everybody else doesn't, or how's that work? Through the Chair, I think that gets into issues of confidentiality that I can't discuss. Representative Hannan. Yeah, thank you, Co-Chair Foster. Because just from a policymaker's perspective, and I know you sat here most of the day, you know, our concern is we want to make sure we get to Phase 2, as Mayor Machicki called it.

We don't want there to be divorce between those two phases because We know that for Alaskan ratepayers, we need Phase 2 to get there. And I guess, you know, you're the— you're in both Cook Inlet, the North Slope, Phase 1, potentially Phase 2, a producer and deliverer. So in my mind, you guys probably have the most insight in how all this plays out. But you also have the ability, because of a legal structure, to keep your cards entirely to yourselves. So it, it's, it's just an interesting thing for us to contemplate how we structure a bill to go forward to make sure that we protect Alaskan ratepayers when there's corporate interests at play that, you know, your competitors— perhaps you're all nice competitors, but you are competitors at some point for the same sale.

Okay. Next question, Representative Bynum. Thank you. Co-chair Foster, through the chair, thank you very much for being here. A quick question.

I have 3 actually, so I'll get to the first one. You indicated that you have agreements that have been signed, and I'm assuming that those agreements have a firm price for the sale of gas included in them. Is that accurate? Through the chair, that is accurate. I'll echo the previous, the gentleman from Great Bear saying those agreements contain both price and volumes.

Okay, perfect. Thank you. The second question I have is really more about, there's been a lot of conversation around the idea that we need to be at Phase 2, and I think that all Alaskans would love to see us at Phase 2, see that throughput go go up, bring down the cost of gas for Alaskans, and then also the additional revenues that the higher throughput would bring. But do you see, um, just kind of a professional opinion on where we're at, assuming that Phase 2 is stalled or is delayed for a longer period of time, or we don't see that at least relatively soon, would you see or envision that we'd be able to see throughput in the line go up just with the for domestic use here in Alaska? And if so, what would you envision that that use would be?

Through the chair, um, so what we know is factual is that Southcentral Alaska uses 70 billion cubic feet a year today. Um, and I think— now I'm speculating— I think you would, in fact, see that demand go up dramatically if Fairbanks and the mining belt also had access to, you know, relatively reasonably priced natural gas. I think you would see dramatic increase in energy use. That's consistent with what we see the world over. When there is, you know, affordable energy, people use it.

Okay. Perfect. And then my third question— and I appreciate that, because I think that that would have drive down the cost, obviously. Having the higher throughput. And then right down to the question I had asked prior to the last presenter about the bill that is in front of us and the idea of a tax relief.

I was just hoping that you might be able to give us a little bit of your thoughts on the need for that and whether or not there would be any different recommendation on a structure from your professional perspective. Perspective? Through the chair, I can't honestly tell you that I know what's in that bill, and so I, you know, I can't really opine on that. Okay. Just as a quick follow-up.

Okay. Without that bill specifically in front of us, there is a discussion about needing to have relief in the mill rate specifically for the development of the midstream product or equipment and project. From your experience, would you be able to say that that would be something that would be necessary to make this project move forward? Through the chair, I mean, again, I can't— I don't know. I'm just way outside my experience.

Right. Appreciate that. Thank you. Okay. I don't see any further questions.

Mr. Soji, appreciate you being here. And we're going to move to our final invited testifier. And that is Mr. Barry Romberg, Vice President of Commercial and Midstream. And thanks for hanging in there. Appreciate you being here.

If you could just put yourself on the record.

So my name is Barry Romberg. Good afternoon, or good evening, as it were. Chair Foster and House Finance Committee members. So it's a little bit late in the day today, and my prepared remarks are actually somewhat redundant to a lot of what you've heard today. So my mission today will be to fill in some gaps for you, maybe demystify a couple of the terms and a couple of the questions that have been coming up, and hopefully finish the day here with a little bit of resolution on a few of those things.

So I've worked for ConocoPhillips for a little more than 20 years. And I'm proud to say that Alaska's been my home state for most of the last 27 years. Did spend some time in Houston and some time in Doha here very recently, uh, working some LNG projects over there. So I'm here on behalf of ConocoPhillips Alaska today, uh, but for context, I'll explain my direct responsibilities a bit because they do pertain to what I'll be talking about today. So as Vice President of Commercial and Midstream, I'm responsible for all of our Alaska gas sales, investment appraisal, business development, land management, and then generally commercial and strategy issues on behalf of Alaska.

In addition to that, I'm the working interest owner at Prudhoe Bay. We have a 36.5% interest in Prudhoe Bay. And I'm the owner's representative for the Trans-Alaska Pipeline and the president of our North Slope pipeline companies that connect Willow, Alpine, and Kuparuk into the Trans-Alaska Pipeline. Aakwaa. So thanks for the invitation to speak today.

I will keep it brief. Uh, but I'm excited here to talk to you about our involvement in the longstanding goal of commercializing Alaska's North Slope gas reserves.

Having said that, as you well know, ConocoPhillips has been very focused for the last 50 years on developing Alaska's oil reserves and, uh, exploring for, finding, and producing oil off the North Slope, which I think everybody can agree is critically important to keep the cash register moving, not just in the future, but just as we sit here today.

So I think it's been stated before, we don't have any plans to invest directly in the AK LNG project. I just want to make that clear. That's something we made a decision on about 12 years ago, and that hasn't changed. Happy to take questions on that, but to say it quite simply, we are an upstream company. We focus our entire company's efforts on finding and developing oil and gas around the world.

And investing in midstream and infrastructure projects just doesn't fit our scope and strategy in our company. It did at one point, and about 12 years ago, we split our company into two pieces. You may remember that Phillips 66 and ConocoPhillips divorced about 12 years ago. So ConocoPhillips, as it stands today, is purely an upstream player.

But I think, you know, I think it's really important that we stay focused on that. And as I said, you know, the oil production today is what drives the state's economy. And I think as a major player in Alaska and a company that's spending $9 billion to progress the Willow Project out west, the state of Alaska needs us focused on that. That's what's going to pay the bills here in the short term.

So you may have seen last week we made an announcement where we announced our GSPA with 8Star, of course, Glenfarnon, and the State of Alaska to supply gas to Phase 1 of the project. That's from our Prudhoe Bay working interest, our 36.5% interest there. And I want to just explain what a GSPA is a little bit because I think that term gets thrown around a lot, but I'll put it in layman's terms. It's essentially a signed term sheet And it contains all the key elements that you'd need to take that into a binding GSA, which would be a gas sales agreement. That's the formal binding agreement.

This process of— this iteration of everybody stacking up on non-binding agreements is very typical for a project of this scope and complexity. What that allows you to do is get everything sorted and aligned as a project developer so that when you move to binding agreements, there are very few surprises. You have all the terms set, and then it's a matter of just converting that into a binding agreement, and that's much more efficient way to get to a final decision.

So, I think, you know, when it comes to these agreements, I think a lot of questions have been asked about pricing and volumes, and I think there's maybe been a little bit of question why it's secret, and I want to just explain that a little bit. The term competitors has been used, and that's very true. You know, we are all competing to sell gas into the project, and I don't know what anybody else's prices are. I only know what price I agreed to, and that's the way it's got to work. If that information was public, then the competition element of this goes away, and that's not good That's not good for anybody.

It's not good for the state. It's not good for the project. And so that's why they're confidential. The only entity that knows what all those prices are is the buyer, 8Star. And that's the way it's got to work.

So in response to one of the questions before of what happens when there's more gas available to sell under Phase 1 than than the project needs, that's probably a good situation for the buyer. And so if you were the buyer of something and you had 4 or 5 different options, you can kind of think about the— how you'd think about where you'd source that gas. And I won't go into the details there, but I think with a little bit of logic, you know, it's a good situation for the buyer. So 8Star has set themselves up very well, I think, with Glenfarron and the state to execute Phase 1 and be able to purchase gas at the lowest possible price.

So we are also involved in Phase 2, and it is critically important. I agree with everything that's been said. They should go together. But I do believe it was a very smart play by the state and Glenfarn to split them apart. And the reason is there's two different drivers.

You know, the pipeline we need desperately, as you heard my colleague from Hilcorp describe, 2029. Is where we start seeing a problem in Cook Inlet. And to get that pipeline in place first means we've solved that first problem in the right time. The phase 2 of this project has been going on for, you know, some— probably more than 40 years. It's much more complicated.

It requires long-term buyers. It requires a significant amount of financing. And for all those things to come together And that financing is very critical, and this is kind of touching on the subject today. A stable fiscal system and a known property tax are things that the financiers of both Phase 1 and Phase 2, they're going to need to see. And if they don't see certainty, at least in that part, it's going to be very difficult for them to move forward and finance this project.

And that financing is the thing that's been missing. And, you know, I think there's been some Question about what Glenfarm brings to the table. Clearly, what I've read about what their plans are, this is what they're bringing to the table. They're bringing access to financing, and that is the critical link to making sure that Phase 1 and Phase 2 happen. So I'm excited to see that go forward.

We're really impressed with the progress that Glenfarm's made over the last year.

Think about— think about how close we are at this point. We have never been closer. There's still a lot of work to do. And a lot of things that need to line up. But I'm very excited to see where this project's at, and again, impressed with the progress that's been made in the last year.

So as we look ahead, with Glenn Fahren in the lead and pushing 8STAR through the next few gates, we are very happy to work with the project and ensure its long-term success. We can do that best by by being a good partner on the gas seller side, and we feel we're doing that. We are excited to move from the GSPA into a GSA and then on Phase 2 progress those negotiations as well.

So that concludes my prepared remarks. Thank you again for the opportunity to talk about the progress on this project. Happy to answer any questions. Great. Thank you very much, Mr. Romberg.

We've got Representative Bynum. Thank you, Co-Chair Foster. Through the Chair, again, I will ask the same question I asked all the other presenters, specifically about the item that is in front of us, and that is talking about tax relief for the project to make it economic— make it economically viable. I was just hoping you might be able to shed some light on your opinion there and maybe some suggestions to us. As we move forward.

So through the chair, Representative Bynum, I, you know, as my colleague from Hilcorp reported, you know, as an upstream gas seller, I don't really have a position on the tax. We're not in that project in that way. We wouldn't be a taxpayer, and the structure of the gas sales contract would not expose us to a property tax issue there. So specifically, I think it would be inappropriate for me to take a position on that. But I'll go back to what I said before and then actually echo something that Mayor Pocatok said in his remarks.

So— and I'll start with that. The certainty around what the property tax is is very important. And I think as a tax collector, for him to make the statement that he believes that some relief is necessary to move this project forward, I would take his comments probably stronger than anybody as the receiver of those revenues. I think everybody gets that part. You know, $20 mils is a lot.

And if you think about what the minimum possible cost is for this project, that's one thing. Certainly, big projects of this size do have a history of overruns. That's very publicly available. Big projects like this tend to create their own weather. And certainly, we've seen that on Willow.

You know, PICA has seen that as well. And it's just It's the nature of the beast when you're dealing with things that are this big and complex. It's hard to pencil everything out up front. You do the best you can, and you put in factors, but I think there's some uncertainty there that makes an investor or a financer quite nervous if it's not locked in and it doesn't make the economics work up front. It's not going to get any easier as time goes forward.

Right? Thank you. Further questions? Okay, seeing none, Mr. Romberg, thank you very much for being here today. And so I think that takes us to the conclusion of our meeting today.

Just a reminder for tomorrow, we do have public testimony. Tomorrow is May 30th at noon. We will be taking public testimony. We expect that there could be a number of folks that would like to testify, and so we're asking folks if they could please limit their testimony to 2 minutes. And also, if folks can also call in no later than— or arrive no later than 30 minutes prior to the end of our allotted time, which I believe is— I think we're shooting for 12 o'clock to 3 o'clock.

So I think the deadline to sign up would be about 2:30. Is that right? Okay. And so also, written testimony can be submitted to the House Finance Committee committee, and that can be sent, emailed to [email protected]. One more time, that is [email protected].

And so if there's nothing else to come before the committee, we will be adjourned. Representative Ballard. Thank you, um, a co-chair. I know we're doing public testimony, but I'm asking, are we going to move forward with amendments here? Our intent had been to try to get through amendments this weekend, but as we move forward, we had a number of folks ask if we're going to have different testifiers.

We're still trying to line up municipal advocate, so we've gotten more, more folks to present, number one. So we couldn't go through the amendment process this weekend. And then we also ran into an issue where alleged illegal is super backed up. And so they need a little more time. And so rather than having amendments being drafted now when they're trying to engross, I think, 34 bills and trying to get those over to the governor, we were going to give them a little more time.

So we're thinking we might set the amendment deadline. I'm looking at my staff. Mr. Anderson, if you could come up to the podium. I think we're looking at setting the amendment deadline maybe on Monday or Tuesday, and it's going to be for either the end of the week. I'm just guessing at this point.

Mr. Anderson, for the record, Brody Anderson, staff to Representative Foster. That's correct, Representative Foster. The idea was to finish up with hopefully producers, Anchorage, a few other things for Monday and Tuesday, set the amendment deadline for at least giving a full, a full week to try to— up to the end of the week to try to give Ledge Legal and the representatives time to fully complete their amendment thoughts before having to get them back to us to put together the amendment packet to move forward. And Representative Ellerud, actually, that was a very good question because things are moving so quickly, um, that another thing that has just come up since last night is the decision to, um, not only with this amendment process, probably start start taking those up on either the Monday the 8th or the 9th, possibly the 10th.

We're still trying to figure that out. But more importantly, it's possible that we could be bringing the Finance Committee, I think, back to Juneau for amendments. Thank you, Co-Chair. That was my follow-up, is are we going to possibly be doing amendments back in Juneau? Correct.

And that's, that's what the current what the plan is, I would say that's the— we're probably 90% there and that's what we're looking at. So. And tomorrow after public testimony, do we have an agenda after that or is it noon to 3 tomorrow? Noon to 3 tomorrow. And also a question because I know that there's also a funeral that a lot of folks are interested in attending on Sunday.

So nothing after public testimony tomorrow. Sunday we would not have anything. There's a number of folks have commitments on Sunday as well as a funeral that folks are interested in wanting to attend. So we'd be back on Monday, and I believe on Monday we're looking at— I think we've confirmed Municipality of Anchorage at this point. We've also got Enstar.

Tuesday, Mr.— let's see, Department of Revenue Stickel. Mr. Dan Stickel is going to be back, and he had a number of things that he's going to report back to us, his homework. And then Glen Farn was also going to be back as well, I believe. Mr. Anderson, through the chair, that's correct. We're trying to finalize the Tuesday schedule for sure, and Monday we're also trying to line up some of the other utilities that will be involved in the, uh, the, the back end of the gas sales for the, for the consumer.

And then on Wednesday, uh, we probably will not have finance. Wednesday, Thursday, Friday, I think the plan is for some of the finance members to start heading back to Juneau to start sitting down with the other body, the Senate, to see if there's some alignment that we can come up with so that we could have a product in the end that actually moves forward, as opposed to coming to a conference committee at the very end and maybe being so far apart. So we want to try to start working with them sooner rather than later. So that's the tentative plan. That for now.

Any questions on that? Seeing none, we'll go ahead and be adjourned at 6:30 PM.