What’s next for Walker’s pipeline plans?

Although Gov. Sean Parnell is down 3,000 votes, it’s possible, but unlikely that the 41,000 or so votes left to be counted will swing any other than they did on election night. We’ll know soon enough, but Republican turned Independent Bill Walker is likely to be the state’s next governor and his running mate, Democrat Byron Mallott is likely to be the lieutenant governor.

It’s an odd pairing, only made possible because of the National Guard scandal and the fact that Gov. Sean Parnell seemed to be caught flat-footed after the so-called “Unity Ticket” was announced on Labor Day. Prior, Parnell only had a shell of a campaign structure, which seemed to turn into a real organization only about two weeks before the election. By that time, most of the air-time was already bought and the National Guard issue dominated the media’s attention.

What wasn’t focused on much was the hallmark of Bill Walker’s candidacy: the fate of both of the natural gas pipelines, the smaller ‘bullet line” and the large diameter pipeline. At forums, debates and interviews, Walker has indicated that if he won, major changes would be afoot for both of those projects, as well as for the state agency—the Alaska Gasline Development  Corp—which is charged with managing Alaska’s interest in them.

The problem? If Walker wants to change the contracts, and to tinker with AGDC, he’ll likely need, if not legislative approval, at least strong legislative buy-in. That, at least on the face of it, is unlikely to happen anytime soon. At a press conference on Friday announcing the House organization for the next two years, House Speaker Mike Chenault, as well as others in House leadership, indicated that from what he’s heard of Walker’s plans, he’s none too excited with them.

“It will take a change in statue to dismantle AGDC,” Chenault said, an agency which he supports. As to the large diameter gasline, he said that the state is “farther ahead than we’ve ever have been.”

House Majority Leader Charisse Millett also chimed in. No matter who the governor is, “no one is going to slow down the process on the pipeline,” she said.

Because it can be confusing, here’s a primer of the two lines:

If built, the large natural gas pipeline, called AKLNG, would carry gas from the North Slope to Nikiski, (with takeoff points to provide gas for Alaska). The gas would be put on tankers and shipped to Asian markets as LNG. That project, along with the liquefaction plant, a massive gas treatment plant, and LNG storage tanks and a tanker terminal. is expected to cost up to $65 billion, and will be one of the largest private construction projects in the country.

Then there’s the small diameter gas pipeline, commonly called “The Alaska Stand Alone Pipeline,” or, ASAP, or the “bullet line.” This line would still bring gas from the North Slope to tidewater, and to Alaskans along the way, but would bring less of it and would be far less expensive to build. Along with a gas treatment plant, and a 35-mile spur line between the main pipeline and Fairbanks, the cost of this project is estimated to be about $7.7 billion. The project was conceived as kind of a back up to bring gas to Alaskans in case a large line didn’t get built. However, AGDC said that the work that the agency has done on one project benefits the other.

Bill Walker has been a vocal critic of both projects. He has said unequivocally that the bullet line is a bad deal for Alaska. He has also said that he wants to renegotiate the terms under which the state is moving forward on the AKLNG project, terms which he called “fatally flawed.” In interviews, he has repeatedly said that he wants the state to take a majority interest in the project. As of now, the state, along with TransCanada would own up to 25 percent in the project.

It’s unclear, exactly, how Walker will do any of this if elected.

What’s clear is that the House Majority, as of now, doesn’t seem interested in letting him do it. “No one wants to be adversarial to start with,” Chenault said. If he wins, he and other members will sit down and talk to him. Until then, “we’ll all keep our powder dry,” he said.

Contact Amanda Coyne at amandamcoyne@yahoo.com


17 thoughts on “What’s next for Walker’s pipeline plans?

  1. Garand Fellow

    Many people commenting here blame Governor Parnell for deficit spending. I think we will now see how Bill Walker deals with over-spending and the need to size state government for the post-petroleum economy. Let’s see if he can do it without creating a late 1980’s type of state recession. Let’s see how much of the cash reserves are remaining once he balances the budget. Let’s see how much of the budget cutting is smoke and mirrors.

  2. Uncle Sam

    How many times has Uncle Sam delivered a message that you’re screwed? So, here I go again…
    Ask Mrs. Rogoff about the Arctic Port deal that she and her husband is angling for, how they are fighting to leep the state from getting primacy and how Begich is helping them. Expains why they needed Walker I think. Alaslkans are on the verge of getting screwed in a major way.

  3. Lynn Willis

    We depend on non-renewable resources for our and future generations of Alaskans’ public funding. After the spending of the last four years under Parnell, think of the revenue we must now realize to both meet our obligations and to prudently restore our budget reserves. The myopic cannot or will not recognize that problem and therefore, they refuse to see that three to four billion per year for the life span of the project is not going to solve that problem if we cannot sustain oil production at sufficient prices.
    I cannot believe you still assume we have brilliantly leveraged ourselves into this great deal by partnering with Trans Canada. They are the ones who have no “skin in the game” with a guarantee of repayment of their costs plus 7.1% AFUDC if this project doesn’t reach FID.
    And once again Jon, you can have all the supply in the world in Cook Inlet yet with no markets except the puny demand of Alaskans, you have nothing of value. That said, if Cook Inlet is so bountiful with export projects being developed for that gas which do you prefer to meet the demands of Alaskans, North Slope or Cook Inlet (not to mention other potential sources such as the Nenanna Basin)? Will these new discoveries of gas from Cook Inlet actually destroy the viability of an North Slope gas line? The dynamics are changing and we have perhaps the worst mechanism to adjust to that change in the Alaska Legislature. Or do you seriously believe that markets will want to wait to pay more for North Slope gas even though cheaper gas is available sooner from Cook Inlet. You cannot have it both ways and remember those Cook Inlet supply contracts expire in 2018.

  4. Crude is Rude - Gas is gold

    Thanks, Lynn Willis & joe blow, for your useful insights…

    Despite 40 years of ridicule, I first began advocating the use of flexible polymer composite gaslines & pipelines in Alaska in 1974.

    goog: flexpipesystems
    goog: flexsteel pipe
    goog: fiberspar pipe

    I agree the ASAP bullet-line is a bloviated overpriced boondoggle.

    CLICK on my nickname above for a link to a demo of how gaslines should be installed all over the interior of Alaska.

    I do have a little bit of experience working with polymer pipe extrusion machinery.

    It is neither difficult or uncomfortably expensive to manufacture our own poly-pipe here in Alaska.
    By making it ourselves in-state we save big-$$$ on transportation costs, and we can eventually become a competitive exporter of poly-pipe in the region, because we have plenty of the feedstock NGL’s to supply our own polyolefin industry, just like North Dakota is doing now.

    How fast can we plow 8″ or 12″ flexpipe gaslines ??
    A Wolfe 540 pipe-plow can install gasline at a rate of 240-feet per minute.
    This is 1500psi methane & NGL’s compatible oilfield flexpipe.

    Do the math; it’s 2,640,000 feet from Deadhorse to Fairbanks.
    2,640,000 / 240 = 11,000 minutes of plow-time
    11,000 / 60 = 183.33 hours of plow-time
    using two plows = 91.66 hours of plow-time
    multiply x10 for Alaskan confusion & inefficiency = 916.66 hrs of plow-time
    working 4hrs/day with 10hrs/day of OJT & coffee-breaks under union guidelines = 229.16 days
    (including 4hrs/day of in the field internet time reading amandacoyne.com) 🙂
    ******** 229.16 days to plow a flexpipe gasline capable of supplying at least 500,000+ gallons per day of NGL’s (propane/ethane/butane/pentane/ethylene) to Fairbanks.

    8″ Flexsteel can be installed in Alaska for under $200/foot
    2,640,000 x 200 = $528,000,000 for the installed flexpipe

    Now, if I was project manager I could easily cut this cost in half…
    …first thing I would do is invest $40million and get Vigor Shipbuilding to help me build a floating flexpipe factory on a barge, this will save over $100million in the cost of the flexpipe FOB-Anchorage, and will continue to add a tremendous value-added industry to Alaska.
    The actual machinery will cost $20million installed on the barge.

    …now, this flexpipe will pay for itself in two years, so roll the loaded dice and repeat this again the next year to double the capacity.

    This is just a little peek at the wide spectrum of Alaska Gas Infrastructure possibilities we have available if we are brave enough to toss the “alignment” in the trash.


    BTW… did you see the Obama-Xi-Putin picture in the news this week ??
    Ol’ Vlad is quite the gentleman, all bigshots are tyrants too.

  5. Jon K


    Companies and sovereign powers don’t evaluate a project’s merits based on today’s prices – they look at the long term costs and benefits. AK LNG will generate hundreds of billions over a thirty year period. This project will happen if we can show that it is cost competitive and the Asian markets are willing to sign up for long term gas supply contracts. To get to this point, we need to continue to spend money on design and engineering work and to fight through the permitting process. If the costs come in too high, or if the feds impose obnoxious mitigation measures that make the project impractical, and/or the Asian markets decide to go elsewhere, the project will not happen. Given the enormous benefits to the state, I cannot see why we wouldn’t stay on the current course, which doesn’t require that state to spend that much money, to see if the project can get to FID.

    So the question is whether we continue on a path where the state is paying a fraction of the costs while receiving considerable benefits if the project gets sanctioned or whether we let some knuckleheads blow up AK LNG and pursue their own fantasy project without the producers’ support. Hopefully reason will prevail and Walker will choose the right path.

    Regarding Cook Inlet, you really need to do more homework. There have been several significant discoveries over the past three years. Two of these discoveries are huge and are moving into development while a third is still in the delineation stage. As a result, there are at least three companies looking to build new LNG facilities in Cook Inlet because we now have an overabundance of gas. Hilcorp also continues to invest and has committed to supplying significant volumes of gas to the railbelt utilities for years to come.

  6. speechless

    Labor may be responsible for a potential Parnell defeat. The drag on the ticket was Mayor Dan Sullivan.

  7. Lynn Willis

    The flaw with the most potential to end the AKLNG deal was the idea of “alignment” over time between the Alaska State Government, Trans Canada, Exxon, BP, and Conoco. Now that “alignment” weakness has become most apparent with the real possibility that Governor Parnell will be defeated.
    Even if Parnell prevails this “alignment” has very little chance now because of the fiscal crisis, facing the state in particular and the other participants immediately, as world oil prices are in decline which will strip them of revenue for investment in what Amanda (and others) are describing as one of the most expensive projects ever attempted.
    Returning to Cook Inlet, despite much promise, we only have firm gas supply contracts through 2018. Neither the AGDC/ASAP or AKLNG project will not be finished by then so that supply issue still hangs over our heads.
    Charisse Millet and her peers need to quit being cheerleaders and become pragmatic realists by realizing that following any election day they may be gone along with this “alignment”. One of the legislators who did seem to have an understanding of this complex business arrangement was Representative Eric Feige who voted for the AKLNG project yet he was defeated in the August Primary. Now a similar fate may well await the Governor. Despite their self delusion our elected officials have not solved the problem of providing affordable energy to Alaskan (in any form) from the use of Natural Gas, to any degree of certainty.

  8. joe blow

    The bullet line is the dumbest idea to ever come down the pike. There simply isn’t enough demand to begin to justify the cost. Anchorage and SC Alaska already have gas, not enough people in Fairbanks.

    Speaking of that, Fairbanks could have had gas 50 years ago, the military wanted to build a small line to supply their bases and sell of the excess to the town. That idea was killed by …. Rep Ralph Rivers at the request of Joe Usibelli.

  9. DB

    Alaskans should show the ADN the door. It is disgusting how the major media in this state, KTVA, KTUU and the ADN used the Guard “scandal” to shape the battlefield for Walker. We should all be wary of what the future of Alaska holds for these “tools” of the unions, the education industry and the radical environmentalists. Bill Walker will go down in history as being owned by those special interests as well as instituting a sales tax, income tax and statewide property tax. Thanks Vince Beltrami.

  10. Sam P.

    Walker made it clear he will clear out the top tier of DNR. He will find a way to mess with AGDC through funding freezes and board appointments, even if he can’t fire Dan Fauske, as he would like to.

    Walker wants a do-over, but while lower oil prices are going to drive cuts in the budget, he is not going to have much leverage on legislators. Sure, they have to work with the governor, but for the gas line, this is gridlock. Sorry, Fairbanks, it’s a tough break.

  11. Garand Fellow

    You’re correct. As soon as the Alaska Dispatch no longer needed the story to defeat Parnell the matter stopped being front page every day. Wall St. hedge fund money bought the only statewide newspaper and then successfully defeated the incumbent governor. Quite the deal.

    Big labor, the education lobby, Sealaska Corp. and yes, hedge fund money will now show all of us exactly what they have done.

  12. Shattered

    There was a story on ADN about it yesterday. And I cannot recall where I read it, but in the last few days there was a story that mentioned that there would be some more DMVA staff being shown the door as a result of the scandal.

    I do hope that those responsible will be held accountable for their actions and inaction in this matter. I suspect that with new management that many will.

    If by chance the current administration remains in place (god forbid), I don’t expect much action of real consequence. They have made some token sacrifices, but I doubt any changes of real importance will occur. They are too busy trying to keep things under wraps to worry about fixing the problem. A lot of redacting and disappearing of hard drives to be done.

    Too much damage control to be done, so there will be little time to fix the problem.

  13. Shattered

    There was a story on ADN about it yesterday. And I cannot recall where I read it, but in the last few days there was a story that mentioned that there would be some more DMVA staff being shown the door as a result of the scandal.

    I do hope that those responsible will be held accountable for their actions and inaction in this matter. I suspect that with new management that many will.

    If by chance the current administration remains in place (god forbid), I don’t expect much action of real consequence. They have made some token sacrifices, but I doubt any changes of real importance will occur. They are too busy trying to keep things under wraps to worry about fixing the problem. A lot of redacting and disappearing of hard drives to be done. Too much damage control to be done, so there will be little time to fix the problem.

  14. Jon K

    Why can’t Walker try to defund the ASAP? No need for legislative change.

    On AK LNG, it is entirely unclear what will happen. Some of the people advising him want to blow the project up and start over. Fundamentally Walker just doesn’t seem to want to be involved in a project with Exxon, BP, and CP having a significant role.

  15. Anonymous

    Does anyone find it funny that the national guard scandal isnt even talked about in the media anymore? The media totally unfairly screwed with this election and I am very disappointed with all of Alaska’s media sources. A tragedy at best.

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