Here’s a memory: It’s 2007, and I’m at the Loussac Library’s Wilda Marston Theater, with about 200 other Alaskans, listening to members of Gov. Sarah Palin’s administration explain a new plan that they promised would finally, after more than 30 years of trying, get a natural gas pipeline built. It was called the Alaska Gasline Inducement Act, or AGIA, for short. And it’s was a different plan than any other plan that had been floated in the 30 years that plans had been floated.
The difference: Historically, the energy companies that hold the lease rights to the gas had been the ones that were going to make the decision about when and how to build the line. They were, in effect, in the driver’s seat. This plan, however, would separate the line from the producers. AGIA was structured in such a way as to allow—in fact to favor—a third party to come into the state and build the line. The assumption was that if the pipeline was built, then the producers would make the smart and prudent business decision and sell the gas to buyers. They would have to. Their shareholders would demand it.
It was a radical rethinking of the project. The producers—among the biggest private energy companies in the world—would be put in a corner. We were, at long last, going to outsmart them.
I’m not sure why I was in the audience. I wasn’t writing about the pipeline, and hadn’t been much interested in it before then. Neither were many of the people in the room around me. But there was something about the AGIA plan—say nothing of Sarah Palin’s administration—that brought us all out. Everyone wants to be part of something, and we were invited to be part of this.
It was a movement, built around sovereignty and self-determination. It was business, but it was wrapped in cause and purpose and ideology. It was something for the history books. It was so much more than a gasline. Just like Sarah Palin was, for a brief moment, so much more than just a governor.
I’m a sucker for symbols and for movements. So, apparently, are many in this state.
But for all the reasons it, and she, were exciting, it, and she were also failures. If there’s one thing that history has taught us it is that business and ideology don’t mix. People chalk up AGIA’s failure to the explosion of shale gas in the Lower 48. And there’s some truth to that. But you can also trace it back to the philosophy underlying it. The producers, among the largest energy companies in the world, the ones that have the lease rights to the gas, were not going to be put in a corner and they weren’t going to have the terms of the project dictated to them without a huge, messy, expensive fight that, had we continued, would have lasted decades.
We don’t have more decades. The oil is running out. The producers, on the other hand, have lots of oil, and lots of other gas in places all over the world. They can wait it out. We can’t. It’s painful to say, but those are simply the facts. We can continue to fight and deny it. We can continue to waste all of our time and energy throwing slogans at it, and watch as the days turn months and turn into years. Or we can make smart, prudent business decisions that work for all parties. And then, we can get on to building a lasting, self-sustaining economy.
After Palin quit, Gov. Sean Parnell, as he’s wont to do, trod lightly. After it was clear that AGIA was going to fail, he allowed his people to quietly assemble another plan, one that would include some aspects of AGIA, and some of the projects before it. For better, and for worse, this was all done without big public meetings, and without big fanfare. This new pipeline plan doesn’t even have a catchy name.
It might not be perfect, and it might not be all that we want, but the pipeline is now closer to being built than it ever has been. Combined, the state and TransCanada have a 25 percent interest in the project. The producers have an interest, and the Legislature—one of the more difficult pieces of the puzzle– is on board. Nothing, particularly this project, is for certain, but for the first time in history, all the pieces are there.
I like Bill Walker. I like his message. I like his crowd. They’re much more my tribe than Parnell’s crowd. I like the excitement he generates. I like all of it in the same way that I liked Sarah Palin. In fact, I like it better than Sarah Palin. I like the movement.
But I also like a strong, stable economy. I like the progress I see in the gasline.
For more than 30 years, Walker has been working on gasline issues, and pushing a plan for state ownership of the line. He’s been thwarted along the way, and he’s angry about it. He’s tempered his message and his anger now, but as recently as 2011, he was calling for the state to finance and build the line itself. Now, he’s saying that he wants Alaskans to be the majority owners in a project that is expected to cost as much as $65 billion.
Walker’s saying that his plan does not entail a wholesale re-write of the contract. While I respect him, he’s either being naive or simply not being straight here. The 25 percent state interest is one of the key components of the current contract. A greater ownership means that all the parties are back at the table, and it means that it has to, once again, pass through the Legislature.
And this time, he’ll be facing a Legislature that is not apt to be sympathetic to him or to his plan. He’ll get some Democrats on his side, but he’s going to face a hostile Republican majority. And unlike Sarah Palin, he doesn’t have a huge wave of public support, nor will he have a huge federal corruption scandal to build on that support.
Even according to the most optimistic predictions based primarily on hope, the whole process will take years.
It might be worth it. Walker can be persuasive when he talks about taking back the state and about controlling our destiny.
But we should all be aware of the risks: And the risks in this case are that what we have now will all be undone.
Sarah Palin was persuasive too. On that day in 2007, she popped in the library where we were all so excited, all so sure that it was going to work. We were all so sure until years went by, oil production continued to decline, the state’s position continued to deteriorate, and in the end, it failed.
Contact Amanda Coyne at amandamcoyne@yahoo.com
Jon,
This is not a solid enough agreement at this time to be of significant concern. The Kitimat B.C. LNG project had only two partners (Chevron and Apache Oil) and had proceeded beyond “Pre-Feed” to “Feed” and then Apache Oil withdrew. AKLNG has to juggle five partners including a legislative body. The problem with the political aspect is “alignment” over time. No legislature can bind a future legislature and therein lies the most serious and potential flaw in SB138. .
I suggest you pick an issue other than the AKLNG pipeline to worry about at this time. I myself am primarily worried about the damage done to our fiscal situation over the last four years and will not trust again the current Governor who created the crisis to lead us out of it.
Flashback to 2008 regarding the AK gasline and AGIA passage.
“In comments published in The Globe and Mail on Monday, TransCanada chief executive officer Hal Kvisle noted that a pipeline would need the support of the three main potential shippers of gas: BP PLC, ConocoPhillips Co. and Exxon Mobil Corp. Given that Exxon holds the most gas, Mr. Kvisle said: “Nothing goes ahead until Exxon is happy with it.” That is still true today. No the pipeline is not in peril today, it will be a market driven decision based on worldwide plays, by companies more sophisticated than the Alaska administration. Even if the tax was zero, it could be decades before a pipeline in Alaska is advanced.
The Gleason decision, laid to rest that TAPS isn’t running out in our lifetime.
We need Walker to assure someone is looking out for the shareholders of our carbon resources which is not the administration we have now, who would rather promote losing revenue from already economic areas of the North Slope. With the secrecy surrounding the Pt. Thomson agreement, Alaskans need Bill Walker to put transparency back in the process and advocacy to ensure Alaskans have a seat on the bus rather than under the bus on $65 billion dollar projects.
And I believe Bill Walker would have dealt with the National Guard sex abuse scandal in a more methodical, decisive, ethical, and transparent manner rather than the inept 4 year stonewalled delay playing out now. Every horrific act that happened subsequent to notification to Parnell is on this administration’s shoulders.
“Would a Walker win put the pipeline in peril?”
If Walker Wins it would not put a properly designed max-volume pipeline in peril.
…Yes, the gasline proposed by Parnell is in peril, but not by Walker.
Parnell’s Pipeline is in peril because of Exxon’s ability to easily directly sell all the Pt.Thomsen gas & gas-liquids off to any Asian buyer who shows up with a tankership 3 miles offshore to their FPSO…
…it’s also in peril because it has many flaws in it’s design and is not competitive with global realities.
click on my nickname above here for the ADN article about this…
Walker/Mallott-2014
Bill Walker is one of the few lawyers I trust.
I see too many dilettante lawyers making comments during this election cycle..
I went to hi-school in Fairbanks, and in smaller schools out in the villages.
“He’s either being naïve or simply not being straight here.” ????????
Bill is stuck playing gas-hockey with a hundred lawyer-kids swinging sticks at a few dozen different hockey pucks all over Alaska…
…it’s smart bill is keeping his cards close to his chest.
There’s asymmetrical gas strategies being played out by the multinationals that make Parnell’s pipeline miss Nikiski and hit straight into the heart of the Permanent Fund.
Bill has a few asymmetrical gas & energy strategies designed to keep all of Alaska prosperous, and not all of them hinge on a megapipe built in a hurry by amateurs.
“He’s either being naïve or simply not being straight here.” I can understand why you’d want to give the guy the benefit of the doubt, but after 30 some years of working for a gas pipeline and making it the focus of 2 campaigns, naïve isn’t a plausible option. I’d call it wilfull ignorance, maybe. Either that, or he’s got an Obama-like ego that makes him think the pipeline will just materialize because he said so. I think the realistic choice is the other you stated: he’s not being straight. If he’s not being straight on his biggest issue, what else is he going to fudge on?
Lynn, I like your conservative analitycs…
yes, we must persist in seeking to diversify Alaska’s economy..
The best market for Alaska’s gas is ALASKA
..we have huge construction development opportunities all over Alaska,
and they can be done with the architectural sensibility to enhance Alaska’s unique wilderness qualities.
I’m not a big fan of building a lot more roads,
but I am developing better marine propulsion systems ideally suited for Alaska rivers and coasts.
These propulsion systems are very different than anything you’ve seen before,
super-efficient, robust & reliable, produce plenty of power & electricity, and surprisingly simple to build and maintain.
…I like the idea of plowing in lots of skinny noodle gasline/fiberoptic all over the interior, propane filled gaslines with broadband internet, then we can run propane powered snogo’s & ATV’s everywhere… plus the widespread broadband/wireless will provide navigational beacons for aircraft safety…. better communications everywhere.
Click on my nickname for the link to the article >>>
Korean company unveils icebreaking LNG tankers
…IMHO; Parnell’s megawhopper gasline fantasy is a cruel joke played on Alaska by multinational corporations like Xxxon.
….it will force us to eat all of our seed corn, then rollover and let the multinational buck-an-ear’s march all over Alaska leaving it look like the darkside of the moon after they scraped everything of value form our once great state.
The $65billion enticement is just bait for a trap.
It forces us to overreach at great risk.
It fools us to climb on top of the ladder picking fruit from the top of the tree first.
Then when we are standing on the sign that plainly says “This is NOT a Step”,
the pirates kick the ladder out from underneath us and steal all the fruit while we are in the hospital.
A big fleet of Asian Icebreaker LNG/LPG-tankers will soon be loading up at Xxxon’s Ft.Thomsen offshore FPSO….
…..I also warned all Alaskans about not having any US-built LNG-tankerships to haul our product to all Pacific Ocean ports, this will bottleneck our LNG.
It’s like throwing an expensive wine-tasting party and everybody forgot to bring a corkscrew.
You re-elect Parnell and it’s proof Alaskans are dumber than a box of rocks.
I sense Bill Walker is right on top of a very complex and fast changing gas-game requiring an open mind to keep all the strategy and tactics in play. He’s smart in holding his cards close to his chest.
The Big Picture is much more complex than the assumptions made by AGDC/ASAP since 2007.
I’m all for ALASKA having 100% ownership all of it’s major infrastructure, including all gaslines..
..not only for economic reasons, but for National Security too.
Parnell’s AK-LNG project is loaded with pork, and it relies on old technology running with poor efficiency…
…IMHO, it’s a pipeline aimed at the Permanent Fund while on the way to Nikiski.
The $65billion figure is a silly counterproductive illusion.
Alaska can easily maximize our use of our hydrocarbons with least effort and highest efficiency.
We do this by starting to go after the low hanging fruit first…
and there’s plenty of windfall fruit fallen to the ground already..
…for example nobody in Alaska was talking seriously about making best use of Alaska Railroad for hauling LNG with LNG/diesel dual fuel locomotives until I brought this issue into the public forums…. yes it was me, and can prove it with my emails to ANGDA several years before AKRR published it’s nice powerpoint presentation on the subject on December 18th, 2013.
Yes, I have made the volunteer effort to visit with Scott Jensen at ECI in Tacoma,WA…
…he’s the best expert you’ll find on converting locomotives to LNG/duelfuel.
Much gas-infrastructure development can be done with very little CAPEX-risk to the state..
some of the important little segments of the Statewide Gas Plan can be completed as self-sustaining enterprises for less than $5million, and they can rave rapid amortization under two years..
Other segments will be a little bigger, but I can visualize a comprehensive 5bcfd max-volume system being built with not more than $2billion of CAPEX-risk at any given time…
…it takes innovative Alaskan Injunooity
…did you know that with a $2million investment we can begin to supply gasoline made from methane in Alaska and sell it for $2/gallon and still make a small profit ??
…yes I used my shoe leather to go visit Siluria in Hayward, CA too.
Alaskans have been treated like mushrooms by big-biz since long before statehood.
It’s time we get far ahead of the global technology curve.
I’m 100% pro-union and a former brother in IBEW-1547
With recent global events it might be now true that the best market for Alaska’s Gas is ALASKA for a few more years in this next global-cycle…
and I’m happy with that, because there’s plenty of prosperity to be had using our gas ourselves building many massive opportunities within our state.
In a couple more years we might find that there’s a 500year trillion-dollar market for Alaska’s gas that can be captured without building a whopper pipeline…
Alaska’s Lemonade Stand is worth zillions not because we gotta lotta lemonade, it’s because we got lemonade in the best location in the world…
….”stranded gas” is just a megabillion tax-dodge farce for BigOil.
I have been in contact with the major American Fortune500 company that can make this possible…
they have an active R&D program working on their end of this right now…
it’s very inspirational and exciting providing a global sweep of possibilities..
…yes indeed this is possible, but if I told ya now I’d have to kill ya ~~ 🙂
********pull my finger ;-p
I disagree with >> “Parnell is a really, really, bad guy.”
…I think he was too young and inexperienced to be governor,
he’s gullible and inexperienced making him a big sucker sockpuppet target for all those opportunist carpetbaggers who have been stealing from Alaska for decades.
…but if you sleep with dogs long enough you will get more diseases than just fleas.
I’d love to take half of Alaska’s legislature out to the woodshed too..
[same with every state in the nation]
Most of us have a very low opinion of politicians in general nationwide.
By “met a private sector pay roll”, you mean derive most of his profit from public funds courtesy of the City of Valdez (and to a lesser extent Fairbanks North-Star and the North Slope Borough) right?
Do any intelligent people believe that Bill Walker has “actually been correct on the gasline”? He hasn’t articulated a clear strategy for developing a gas line in any of his debate performances and his website is similarly vacuous.
Maybe you should use facts instead of talking points and hyperbole in your commentary.
Walker/Mallott-2014
I agree with Mr. Forecast’s comments in this thread…
Walker knows Alaskan Industry must be super-competetive with global dynamics…
I know we can do this and keep strong union wages for our people,
but there’s no room for pork.
Parnell’s cost estimates he has collected from his flock of “experts” are loaded with pork and they do not pass the red-face test.
Alaskans are getting ready to elect Bill Walker by a wide margin because Capt. Zero has demonstrated profound incompetence on so many fronts. Whether it was his ignoring the sexual assaults in the Guard, or the massive deficits he has created, or his wasting six years on the gas line…
Alaskans need a guy who has actually been correct on the gasline. We need a guy who has met a private sector pay roll for thirty years. A guy who is honest.
That is why Bill Walker is winning. Alaskans are tired of paying hundreds of millions for studies, and seeing their resources given away.
Parnell is a really, really, bad guy. When we rid ourselves of him, we also get to clean house of the scumbags Parnell has surrounded himself with.
Bob, your reading comprehension needs work. You ALMOST understood the point.
Almost. Thanks for playing.
Lynn, Sb 138 found the sweet spot of maximizing revenue, minimizing risk, and limiting costs to the state. If this project goes forward we are expected to see $3-4 billion in additional revenue every year. We will also see more oil production because a project of this size will attract more companies to look for oil and gas. The more drilling will result in more discoveries of oil and gas, which in turn means more production. If this project happens, our financial footing will be much firmer for decades to come. We will also be able to displace diesel in many communities to help lower energy costs for rural Alaska and create value added industries to diversify the economy.
The main reason why I am so opposed to Walker – despite agreeing with him on many issues – is that I fear he is going to mess all of this up. His vagueness, flip-flops, empty populist platitudes, and pandering on such an important issue should be a major a red flag for all Alaskans.
JK, the markets were ALREADY here. They were ignored. The markets wanted to build the project. The oligopoly does not want to lose control.
You do know the nonsense being pitched by Parnell is anti-trust, and in violation of federal law?
Maybe if you did a little bit of research you’d see this game has been going on for over 30 years. Come back after you’ve done the research on the phony gas line announcements just published in the ADN, for thirty years. The binder will be over 7 inches thick.
Keeping gas warehoused is more profitable. Letting gas on the market and prices decline, absent, new demand. Basic economics.
It does not take a genius to understand that Walker et al. are bomb throwers and will be very bad for Alaska. We need Governor Parnell’s steady leadership. Vote for Governor Parnell.
I am not basing my vote for Governor on any pipeline prospect because the future is too clouded to decided. Yes we have made progress, perhaps more than ever; however, we have been nearly that far before as was the case with AGIA and the other projects now dead. We also have some motion with land being purchased and studies being made; however, I would not confuse that motion with actual progress at this point. We are just starting “pre-feed” which, according to the State DNR, will take 12-18 months. Next if possible we will proceed to “feed” for another 2-3 years. Only then is the final investment decision (FID) made and constrution begins.
As Amanda points out we have one field and one pipeline while our “partners” have several options worldwide which will give them a tremendous flexibility we won’t have. Our “partners” will, at times and in other locations, be directly competing with us. Our “partners” in the oil and gas industry are staffed by capable professionals and very focused on profit while we Alaskans must depend ultimately on a changing body of legislators whose priorities change daily and whose movements are as predictable as a flock of Starlings in flight.
And then there are the costs. We now live in an era of decreasing state revenues compared to past years and now we made it worse by depleting our savings. Cost overrun is an almost certainty. Jon K. mentioned the Gorgon Project in Australia. According to the data presented by the legislative consultant Enalytica, Gorgon is experiencing a 45.9% project cost overrun. Of the twenty gas projects reviewed by Enalytica the average cost overrun is 35%.
I appreciate wanting to control this project and maximize our profits; however, we will be seriously challenged to meet our obligations under future contracts regardless of our equity position.. So while we will lose control and profits with a minority interest I agree that is certainly all we can afford and I doubt if we won’t have to spend the Permanent Fund to pay for that.
Remember, even it this works, AKLNG is not going to produce nearly the revenues oil has and, if we don’t change our attitude toward saving our earnings from resource development, our children will be facing the same problems we are today.
Sad isn’t it? Some folks put so much time and energy into dogma and so little into critical thought.
Dan, You are right, they could learn something here.
I hear your a bit of a sporting fellow, How about you take “They’ll learn” and I’ll take “They Don’t” and I’ll give you four to one?
I had a similar thought yesterday that has me leaning Parnell.. it was mostly centered around walkers insistence on 51% in my mind, thats simply too much money for our state government to be risking at once… on anything, including a gasline. 20% is plenty, with the private sector leading. Everything else about Parnell as governor disgusts me, and I really really like bill walker & his overall message too. Voting is going to be a tough decision, all based on walkers gas line mavericking
Forecast, you are mistaken on many fronts.
First, Exxon, BP, and Conoco aren’t conflicted. They want this project to move forward so they can monetize their massive gas assets that are currently stranded. Putting in place a transportation system to get North Slope gas to market will dramatically improve their balance sheets.
Second, the Producers aren’t going to decide if this project moves forward. The market will. If Asian buyers can find cheaper and more reliable gas from others, that’s where they will buy it. Our competition isn’t Exxon. It is whether projects in Western Canada, the Gulf of Mexico, Australia, Russia, Qatar, and East Africa can deliver LNG more cost effectively and reliably than we can.
Third, the Producers aren’t screwing around this time. They are spending $4 billion at Point Thomson, which is a gas field, in order to prime the field for a gas pipeline. They have spent hundreds of millions on design work and permitting. They have put their top talent on this project and have hired hundreds to work on it. They have submitted FERC and DOE applications. And they are purchasing land in Kenai – hundreds of acres. Companies that are serious about protecting shareholder value don’t waste billions of dollars, a ton of resources, and their top talen’t time on projects they don’t believe in. They value money, their reputations, and their employees’ time too much.
What makes this project unbelievably expensive is combining the world’s largest gas treatment plants with one of the longest artic gas pipelines with one of the world’s largest LNG facilities. The Gorgon LNG project is well over $50 billion. Given the complexity and size of this project, there is no reason to believe that the costs are way off. After all, under AGIA the state estimated that the costs for gas treatment and a pipeline to Valdez was $25 billion in 2008 dollars. This estimate, however, did not include the LNG facility, which is about 60 percent of the cost of the project.
You say you are skeptical of the cost estimates, but where are your cost estimates coming from? And why would Exxon inflate the costs – how does it benefit them?
Bottom line, because people like you will be running the Walker administration, I fear for our future.
Lynn: That “my way is the highway” line of Tony Knowles got oodles of support. That’s one of many reasons why I fear slogans and catchy names for pipeline projects.
You are correct.
There will be no pipeline and Exxon is laughing at the rubes willing to spend billions of public dollars wishing one into existence.
Agree or disagree wiith the premise of your article, I believe that Alaskans need to be exposed to more provactive articles such as this. Thanks for the read. It causes me pause as II head to the ballot box in 48 hours.
Hey Forecast –
Coyne DOES NOT contradict herslf whtsoever. The point is that the producers own molecules throughout the world and can determine which projects where are best for development based on economics,etc. They can wait to develop Alaska’s resources; however, we Alaskans don’t own molecules all over the world and need to bringg gas on-line and develop some of our smaller satellite fields for economic sustainability. So, your bright little comment showed a huge ignorance about geo-political-economic climate of gas development.
Amanda Coyne contradicts herself:
“We don’t have more decades. The oil is running out. The producers, on the other hand, have lots of oil, and lots of other gas in places all over the world. They can wait it out. We can’t.”
This is a correct statement, Amanda. Now please take this to the logical conclusion. Why is Alaska with a 12 percent stake in a LNG plant going to get a project that the oligopoly does not want because an Alaska project competes with its other projects?
Walker is the only one making sense. Alaska takes a majority interest in the project, and WE are in control. Letting conflicted partners (Exxon) determine when we get a project is beyond stupid.
BTW, pipeline projects of greater complexity have been built for far less than the silly numbers Exxon is tossing around to scare Alaskans. The REX pipeline of 1,679 miles was built in 3 years, from first permit filing to completion for only 6 billion. That pipe is TWICE the length of the pipe we need. A LNG plant and a GTP plant can also be built for far less than what Exxon is describing. Exxon has lied to us before. They will lie to us again. They are lying now for competitive reasons. Exxon wants Alaska gas warehoused so our gas does not compete with its other projects.
This explanation help you out, Amanda?
Gas commercialization is one of the most important issues facing the state and this election will play a pivotal role in determining the state’s economic future. Walker and Parnell agree that this project can happen, that there is real momentum, and that the benefits of this project far outweigh the costs and risks. Both candidates understand that if we can get a project sanctioned, Alaskans will see billions in additional annual revenue, an increase in oil production, a huge amount of economic activity, and we will have the resources to provide energy relief to many rural communities.
The disagreement centers on how to increase the probability of getting the project off the ground. Walker believes the biggest obstacle to project success are the Producers. He therefore does not trust them and wants to minimize their role in the project. Instead of working with the producers, Walker would prefer to have the state align with the customers/buyers (Kogas, Mitsuibishi, REI, etc.) and let them drive the project over the goal line. There are three fundmanetal problems with this approach
(1) The customers/buyers are scouring the world for the best deal / cheapest gas. They will toy with Alaska to see if whether we can deliver gas at the cheapest possible price. If we can’t, then they will dump us and go with another alternative – east Africa, Qatar, Gulf of Mexico, etc. Just because some Japenese company says they want Alaska gas, doesn’t mean they will sign binding commitments to purchase the gas. These guys want as many viable projects on the market as possible in order to drive down the price of LNG. Walker doesn’t seem to understand this.
(2) Unlike the Producers, the customers / buyers don’t want to maximize the value of Alaska’s gas – they want it cheap. Alaskans, Exxon, BP, and Conoco, in stark contrast, want to get the highest possible value for Alaska’s gas. Thus, to the extent that we want to generate the most revenue for the gas, our commercial interests are aligned with the producers and not with Walker’s clients – the Japanese and Korean utilities.
(3) The entities behind AK LNG are the optimal partners for this mind-boggling project because nobody knows more about all of the major components of the project than they do — north slope gas production, integrating the gas production with ongoing oil development, figuring out how to treat the Prudhoe and Point Thomson gas so it can be shipped down a pipeline (the gas treatment plant is about 1/4 of the cost of the project), the construction of an arctic pipeline, constructing a liquefaction plant in Cook Inlet, permitting, and shipping cargos of LNG to Asia. Bringing in new players means we will have to hit the reset button and it will take years and hundreds of millions of dollars to get back to where we are today. Alaskans should have little doubt that Walker’s approach will kill this project and force the state to find new partners – most likely Walker’s old clients from his AGPA days — because it is virtually impossible to believe that the Producers would be willing to play along with the State if Walker insists, as he did in Mat-Su on Friday, on changing the terms of the deal that have been blessed by 52 legislators.
Parnell’s approach flows from the belief that the best way to get a gas pipeline is if all of the stakeholders are aligned – the producers, who own the rights to the gas, the legislature, and the state. SB 138 set out the ground rules and charted a path forward. It received the buy-in from the Parnell Administration, the Producers, and 52 legislators. In the process, we have put to bed many of the contentious issues that prevented alignment – Point Thomson, rolled-in rates, oil taxes, state equity in the project, etc. and have made extraordinary progress on engineering, design, and permitting work.
Walker will throw all of this away so the state has “control” of the project. To do this means that Walker will have to change the existing legislation and he will have to renogiate binding contracts. What’s even more alarming is this “expert” cannot even tell Alaskans how he will get control — why does he think he can get the legislature to change Sb 138? Why does he think he will be able to get the Producers to modify existing contracts?
The state’ best chance of having a bright future requires us to stay the course. This is why Democrats like Charlotte Brower and Mike Navarre have endorsed Parnell.
I am astonished you could write a lengthy post without using the words “National” and “Guard.”
Does anybody reading this thread know anything about flexpipe gaslines ???
This is a rarest of moments when someone abandons their ideology and instead sides with what they perceive as true. This is a perfect example of why Amanda Coyne’s influence has spread so quickly. Ms. Rogoff and Mr. Hopfinger you could learn something here.
Jon,
Cook Inlet supply improvement or importation of gas motivated my support for ASAP and there was no alternative AKLNG project. Dan Fauske once said that if ASAP gas costs exceeded the cost of importation he would be on a ” fools errand”. I don’t hear that justification for ASAP any longer.
The improvment in Cook Inlet is encouraging but we are not realizing any revenue for the state, consumer gas prices are up significantly and no firm supply contracts beyond 2018 – long before AKLNG, or I suspect, the now much larger diameter ASAP line could possibly help us. We are still not out of the woods for gas supply but now we certainly can only afford one of those projects can’t we? That is a valid question now since they follow the same route and ASAP is now a 42″ diamter line and I believe AKLNG will be larger but a similar diameter than AGIA was to be.
Jon,
I meant to write the “Denali” project not the “Denial” project although perhaps that would have been a much more descriptive name for it.
Jon,
(I’m used to responding to myself now.)
The Denial project was an “in your face” gesture if I ever saw one. In any event I think I told you once about the testimony of Ms. Forester (I respect her very much) of the AOGCC before a legislative hearing in Anchorage I attended several years ago concerning the then “bullet line”. That line was restricted by AGIA to 500 million cubic feet per day from the North Slope. She used the term “Tooth Fairy” which is memorable. She told the legislators that she was fairly confident AOGCC would not oppose releasing the relatively small volume of gas for the Bullet Line and that would be acceptable; however, she said that if that night the “Tooth Fairy” was to produce either the AGIA or Denali projects on the slope she could not, at that time, assure support of the marketing of that gas because of its’ value in producing oil. I thought to myself how those legisaltors could possibly have signed up for AGIA without consulting the AOGCC to at least have understood the AOGCC concerns and permit process and I very much have that concern today. We never heard from the AOGCC during all the hearings on AKLNG and I think that was a serious omission. You dismiss it, I do not.
Regardless, I think what really killed our chances for any LNG project in my lifetime goes back to the time when the legislature actually outlawed the construction of any pipeline along the shore of Northern Alaska toward Canada to tie into the then McKenzie River gas line project. That might have been a serious strategic blunder for Alaska. The motive apparently was to force construction of any gas line into Alaska for jobs, revenues, etc. I understand also lurking behind that effort was Bill Allen who stood to lose substantially if the route didn’t stay in Alaska for VECO to be able to build the infrastructure.
So here we are once again ready to kick that Football Lucy is holding…..
Me again. Geez. Need to stop putting your name in the name box.
The entire purpose of AGIA was to be able to move forward without the producers. Denali did nothing to impact AGIA.
Anyway, Walker doesn’t know what he is talking about. He has no plan. He announces a different position on AK LNG depending on the day. His lack of clarity and flip flops is frightening for a guy that says he is an expert.
What happened to the Lynn that was fully behind the ASAP line?
Hello again Jon,
Amanda might have mentioned that shortly after AGIA was announced it was effectively terminated by two of the producers, Conoco and BP, when they told us they were going to build an alternate project – the Denali Pipe Line, a project which is also now resting in the gas pipe line graveyard next to AGIA and the rest of them.
Now here we go again because, if for no other reason, everybody needs a pipeline plan to run for office. We are paying for two pipeline projects now, AGDC/ASAP and AKLNG. Without having to plow the same ground again, let us remember that these two projects are barely off the drawing board with hundreds of millions of state dollars to spend now in “Pre-feed” then “Feed” just to let us see if this could possibly work. Millions leading to billions as we proceed over the next years to fulfill that Alaskan desire best described on the bumper sticker: “ LORD, PLEASE JUST GIVE US ONE MORE PIPELINE AND WE PROMISE NOT TO PISS THE MONEY AWAY. Speaking of money, because of our recent record spending we might not have the funds to afford this “equity partnership” without spending the Permanent Fund and now facing declining revenues we aren’t going to earn like we once did any time soon.
And what did I read about today but an icebreaker LNG tanker, a fleet of which, might just allow Norwegian gas to “come across the top” just as we are building our gas line, But who cares, because have an eminently capable and flexible team of elected officials, many of whom will not be in office over time, who are every bit as qualified to play in the international LNG market place over the next decades as are the analysts and executives of the producers. Plus we have “rented” Trans Canada again after our relationship with them in AGIA so what could possibly go wrong? These can’t be the same elected folks who couldn’t manage our State National Guard are they? Nah……
Interesting read, Amanda. I see a lot of the ‘populist appeal’ that was Sarah Palin also in Bill Walker. Parnell found a way that makes a pipeline work for everyone who needs to have a role in a successful project. If Bill Walker thinks he can renegotiate terms, or get the state a higher ownership percentage, without having all those parties also want more of their own interests met. It would quickly degenerate into a mess.
I think Parnell is not given enough credit for the way he crafted the current agreements, in which each party gets what it needs to go forward, without giving up too much. State included.
The current agreements were also carefully made to balance state risk and reward. The state would be out on a real limb if it goes for greater ownership share. Think about how volatile the global energy markets are; how massive and risky this $45-60 billion project is. It helps to spread that risk around several parties, instead of having the state take too much on. Bill Walker’s talk on the gasline frightens me, for Alaska.
Amanda, correction: we have a 25 percent interest in the gas and a 25 percent interest in the infrastructure, which has 3 main components: gas treatment, pipeline, liquefaction. TC currently is carrying our costs (I think all of them, but not sure) related to the GTP and pipeline. Bottom line, TC has about 40 percent of our 25 percent interest in the infrastructure, which means they are responsible for 40 percent of our costs right now. We have the option, however, to buy TC out and control 100 percent of our 25 percent. As we learn more about the project the legislature will have to decide if it wants to expose the state to the increased costs and risks associated with a full 25 percent interest in the infrastructure.