While developing our comments, RDC’s Board of Directors received several presentations directly from TransCanada as well as ConocoPhillips. We also considered our previous positions on the AGIA statute and fiscal terms for resource development projects. Our specific comments are detailed below.

1. RDC did not support the AGIA legislation as an appropriate vehicle to advance commercialization of gas. For your reference, I have attached a copy of our comments submitted during the AGIA legislative hearings (April 30, 2007).
2. We were disappointed, but not surprised, that only five bids were submitted under AGIA. The Administration correctly determined that four of the applications clearly did not meet the requirements of AGIA. We are not questioning the Administration’s completeness determination of TransCanada’s application. We do question, however, whether the analysis of only one proposal will allow Alaskans to determine if the project sufficiently maximizes benefits to Alaskans. The AGIA process is not the only way to commercialize North Slope gas. However, given the Administration has determined TransCanada has complied with the AGIA application requirements, their application should be evaluated to determine if its benefits and risks result in a determination that the TransCanada proposal sufficiently maximizes the benefits to Alaskans and merits issuance of a license under AGIA.
3. The Administration was inconsistent in allowing a Liquefied Natural Gas (LNG) strawman to be created for comparison, yet not allowing the ConocoPhillips proposal to be reviewed. In her letter to Backbone II (January 30, 2008), Governor Palin indicates, “My administration is committed to undertake a detailed evaluation of likely LNG project designs before determining whether a pipeline that goes through Canada will sufficiently maximize the benefits to the people of Alaska and merits issuance of a license.” Proposals either met, or did not meet, the requirements of AGIA. If the Administration is not happy with the quality of applications it received, it should revise AGIA and re-open the bidding process to allow bidders as much flexibility as possible to encourage competition and allow the free market to work.
4. In order for a gasline to come to fruition either as part of, or outside of, AGIA, the Alaska Legislature and the Administration must ensure a fiscal framework is in place that is conducive to a successful open season. The recent ACES special session, which raised tax rates for the third time in three years, demonstrates why future shippers on a gasline are wary, and why an open season if held today, would likely be unsuccessful.
   
   In fact, TransCanada stated in its application, “TransCanada would rely on the State of Alaska to take all feasible actions exclusively within its authority as a sovereign power to ensure a favorable economic environment for potential Shippers on the Project. Those actions include: engaging with the ANS Producers to reach agreement on a commercially reasonable and predictable upstream fiscal regime that balances the needs of the State and the ANS Producers.” TransCanada has also testified on the record before the Legislature stating “No customers, no credit, no pipeline.” ConocoPhillips has requested the same in its proposal submitted outside of AGIA, “We believe it is critically important to define a framework for gas fiscal terms now such that we can complete a successful open season in 2010.” Alignment on a future tax system will lead to the lowest cost distribution (tariff) and ultimately the highest netback to the state. We implore the Administration to work to make this happen.