Below is an excerpt from my weekly column in the Anchorage Daily News:
It’ll be the biggest, most expensive, and most important project in the state’s history. The large diameter natural gas pipeline, as being discussed, will outlive us all and our children and our children’s children. It’ll outlive Rep. Les Gara’s outraged moralism, and Rep. Lora Reinbold’s fears of gays getting married. It’ll outlive Mike Chenault’s tenure as speaker of the House and it will outlive Rep. Jonathan Kreiss-Tomkins. The gas will still be flowing down the pipe when archeologists unearth Sen. Lesil McGuire’s shoe closet keeping time with Sen. Click Bishop’s bolo collection. It might even still be flowing when Rep. Don Young decides to retire.
A big, complicated project comes with a complicated contract that our legislators are trying to come to grips with. So much to learn and understand in 90 days. The tax structure, for instance, is clear as drilling mud. Then there are questions about what in the world TransCanada’s role will be in the process, other than to serve as a funding source. Once, the company was going to build the line. Now, it appears that in essence, it’s a bank, to which the state will guarantee a 12 percent rate of return on equity, a rate of return that even the Permanent Fund doesn’t get and a rate of return that almost any Alaskan would salivate over.
Whatever. It’s an election year. Gov. Sean Parnell can’t have independent candidate Bill Walker be the gas line guy. And no Republican legislator wants to be antidevelopment.
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Continue reading here.
Lynn,
I should also add that while you take the state to task for failed projects, you apparently strongly support the state spending enormous sums of money on ASAP – a project that could just as easily bankrupt the state and has none of upsides associated with the AK LNG project. (And it is also a project that will need someone to appy to the AOGCC for gas offtake but for some reason you aren’t concerned.) Can you reconcile your disdain for state boondoggles wih your advocacy for ASAP? If its about getting energy to Alaskans we can save the billions spent on ASAP and just cut checks to every resident. It would be far cheaper.
So these companies are spending tens of thousands of man hours and spending hundreds of millions of dollars for nothing? They will be applying for an export license soon for no reason? And their teams marketing their gas in Asia (for the first time) are also doing this for no reason? Exxon is spending billions and billions at Point Thomson for 10,000 barrels a day? Look at what they are doing and explain to me how this isn’t real.
This project, while challenged, is real and has a chance of succeeding – even Larry Persily agrees. We cannot afford not to spend the money to help move the project along.
If you want to read more about the AOGCC gas offtake process, read this: http://doa.alaska.gov/ogc/Gas/NS_Gas_Sales.pdf
You seriously need to get over your fixation with gas offtake rules. This will come in due course.
Of course this will be the time when “hope” alone will see us through, therefore critical analysis can wait until after we pass enabling legislation and spend millions we now cannot afford. Remember we are in deficit spending now and, as has been said, oil pays the bills while gas heats our homes. If this gas is needed for oil production then that is the best use. Where is the AOGCC, and where are the applications from the producers to the AOGCC to release this gas?
Sorry, I am now jaded to the hackneyed line from some about generating income, providing jobs, diversifying the economy, etc, etc, ad nauseum. That is exactly what was said about AGIA wasn’t it? And that is what is said about every large or small transfer of wealth to a select few from our “leaders be it for a dam, a bridge, a legislative office building, a rocket launch facility, a fish plant, a barley project, a shipyard, another port project and on and on.
We have no state energy plan so we continue to chase these solutions like AKLNG because we either have our backs to the wall and/or we want to hear good news. If this AKLNG goes bust after significant financial loss to the people, then this is not my problem, it is our problem and most significantly, our children’s problem. I live in a sovereign, not an investment bank.
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This republican was repulsed by Mayor Sullivan’s attitude associated with his fund raising triip to DC while “on the public dime so to speak”. I won’t be voting for Sullivan. If McGuire is the only other candidate then she’ll get my vote. His behavior and then his ludicrous response was unacceptanle to me. He is becoming more arrogant with time.
And there’s your problem: AK LNG is about a lot more than just getting gas to Alaskans. It’s also about generating billions of dollars in additional revenue for the state and local governments; growing and diversifying the economy; and jobs.
I am a supporter of a sustained affordable supply of gas to Alaskans. We have several options including Cook Inlet and other promising locations within Alaska. .Cook Inlet is looking better and may eventually provide relief. I still support ASAP for two reasons; first, absent a known proven resource elsewhere the North Slope is the only alternative to importation. Second, Dan Fauske has openly stated if the price of ASAP exceeds importation, he would consider the ASAP line a “fools errand”. That makes sense.
Cost overruns are always a threat and listening to the testimony in Juneau from the consultants the larger the project the more chances of overruns. I fear that would be a problem with the AKLNG because it is a huge project.
Reader: Amanda here. I’ll see what I can do.
Lynn,
Everything involves tradoffs. If the state wants to maximize revenue from this project, then we need an ownership stake. The upside for the state is $2 billion to $3 billion per year. But as you point out, the downsides and risks of having an equity stake are also significant. The state needs to decide: more risk &more revenue for 30 plus years vs. less risk & less revenue.
I recall correctly, you are a big supporter of ASAP. Do you have any concerns about cost overruns for that project? If not, why not?
I’m sad. I love reading your stuff but now it looks like much of your good stuff will be hidden behind the ADN’s paywall. 🙁
This new AKLNG gas line is going to be very expensive for the people of Alaska if we decide to “align” ourselves with the producers and Trans Canada as business partners. According to data provided to the legislature by their own consultants Enalytica the State of Alaska, in the least expensive scenario in which we borrow from Trans Canada, will have to pay an estimated 7.2 billion (yes billion) dollars between now and 2023. According to our own Commissioner of Revenue this expense, beginning in 2018 will consume ever increasing amounts from our revenue accounts until the gas starts flowing through the line. During the period (2020 to 2023) of actual construction the least expensive scenario will consume between 20% and 30% of our unrestricted revenues based on fall 2013 forecasts.
Don’t expect financial help from the Feds. A letter from the FERC representative in Alaska has clearly explained that the federal money that would have been available for construction to the lower 48 will not be available for construction of a gas line intended to ship gas to Asia.
If we don’t “partner” with Trans Canada on the AKLNG line in addition to the 300 million we have already paid them, we are on the hook for at least an additional 130 million under the current AGIA agreement and perhaps much more if we are guilty of breech of contract for the current AGIA pipeline.
There should be no rush to judgment on this one. We did that with the original AGIA line and look where we are. We already have the AGDA/ASAP line working toward a decision point which is that if the AGDA/ASAP line cannot deliver gas cheaper than we would pay for imported LNG there is no reason to proceed. I would suggest we let the AGDA/ASAP line proceed to open season without creating an alternate gas line to literally compete with ourselves.
We are now hearing that any delay on the AKLNG project will cost us future revenues so we can’t delay our decision. I don’t buy that.; however,if Governor Parnell, and like thinking legislators, are willing to allow the creation of “son of AGIA” without taking the necessary time to study the issue, then he and they should have the courage to tell Alaskans that for the next decade they will suspend the PFD payments to allow us to build up the necessary cash reserves to pay for this pipe line and state government. Or as an alternate they will introduce legislation to allow the people to vote to began to spend the corpus of the permanent fund and let future Alaskans fend for themselves. .
Read this in the Anchorage Daily News earlier today and loved iit. You have a unique tqlent to make me laugh while imparting some fun, valuable, informative material and analysis. It’s great to have a woman be the best political reporter in the state. Keep up the great work. Love the attention you give to women’s issues.
Love your sunday column. Sen. Gardner’s bill reigning in the Anchorage mayor is a good piece of legislation but I did think it was in slightly poor taste for McGuire to sign on as a cosponsor. You also made a good point on drawing attention to the magnitude of the gas pipeline and its importance to the future. I don’t think our legislators are approaching the issue carefully enough. Can someone tell me what the rush is other than giving some politicians a trophy for the election year ? This needs far more study. Our legislators have “pipeline fatiguue” and think it doesn’t matter because they’ve all passed other gas bills and we all know how useful they were. There is something not right about the deal with TransCanada. It just doesn’t make sense if you really look at it. Believe me when I tell you it needs a lot more study and review. Hopefully the House will take it more serioisly than the Senate did. The Senate Resources Committee review was soiphomoric at best. I do have confidence in Chenault, Hawker, Stoltze and Thompson to do the right thing in the House.