• Forecast
  • News Tip
  • Categories
News Alert: Follow our AFN Live Blog - Read More
Temperature Precipitation
Estimated read time
2m 50s

Debate over LNG heats up as the session winds down

By Rhonda McBride 12:42 PM April 12, 2014

With just a week left in the legislative session, some are asking if a liquefied natural gas project that could bring tens of billions of dollars to the state is possible.

On Thursday, the House Finance Committee heard from Rick Harper, a consultant who raised some serious questions about the proposal.

The co-chairman of the finance committee, Rep. Bill Stoltze, said he scheduled Harper to testify following a request by Democrats on the committee. And Stoltze said he thought it was a fair thing to do.

Harper has consulted for the state for years on oil and gas issues. And he’s seen many efforts to get North Slope gas to market fail.

But this project, he says, actually has a good chance of happening. But he has a warning.

“I will tell you from the get go, that my chief concern is the royalty in kind versus the royalty in value,” he said.

For oil, the state has primarily taken its royalties and taxes as cash.

Under the lease agreement, oil companies don’t charge the state for marketing its share of the oil.

But under the governor’s plan, the state would receive gas.

“It’s a huge concession that we’re giving the industry,” said Sen. Bill Wielechowski. “The current leases require they have a duty to produce, they have a duty to market the gas. “

Wielechowski believes the reason Harper hasn’t been heard from until now is because he’s a contrarian voice.

“He’s eminently qualified. In fact he’s probably the only expert that we’ve had that’s actually built pipelines. He’s actually managed LNG plants,” Wielechowski said. “He’s someone we’ve been using in this state for decades. Republicans have used him for years.”

Commissioner of Natural Resources Joe Balash said the issues flagged by Harper are risks the state is aware of and has taken steps to mitigate.

The administration says there’s a reason there will no longer be an either/or choice for royalties and tax payments.

Gas contracts are long-term. And it’s not a good idea to switch back and forth.

“Virtually every lease I’ve ever seen and ever helped negotiate in the oil and gas industry has in it the right to take your share in kind,” Harper said. “I personally have never seen it once exercised.”

Harper told lawmakers the state could take on a lot of risk marketing its own gas.

“The state is a minority player, not only in terms of the production from the North Slope area, but a minority player in terms of the world stage,” he said.

The administration of Gov. Sean Parnell says it could still turn out that oil producers will market the state’s gas. And the understanding now is that the state will not be charged for this service.

The state also wants the option to try marketing its gas on the table.

“There might be buyers out there who can provide the capital necessary to pay our share of infrastructure,” Balash said.

Infrastructure that will be the largest megaproject in Alaska’s history. The cost could run as high as $65 billion.

The administration said state ownership could help bring that cost down and make the project more likely to happen.

The governor’s legislation, SB 138, lays the groundwork for state partnership between Alaska’s three big oil producers and a pipeline company.

The House Finance Committee heard public testimony on the bill at 8 a.m. Saturday.

Latest Stories

  • News

    Flash mob brings opera to students at Clark Middle School

    by Lauren Maxwell on Oct 20, 20:11

    Students at Clark Middle School got more than they bargained for at the school cafeteria on Thursday. Lunch came with a side of opera and dance, courtesy of a flash mob. Several members of the Anchorage Opera dressed as cafeteria helpers surprised students by bursting into song for a short performance from Rigoletto. Bruce Wood, […]

  • Anchorage police want to teach you how to track local crime online

    by Shannon Ballard on Oct 20, 19:56

    The scanners may be turned off but the Anchorage Police Department (APD) says there is another way to figure out when crime is happening in your neighborhood. For the first time, the Anchorage Police Department is hosting a series of Community Crime Map training events. The technology has been around for years and officers say […]

  • News

    50 years later: AFN remembers milestones, talks unfinished business

    by Liz Raines on Oct 20, 19:15

    The Alaska Federation of Natives (AFN) kicked off its annual convention in Fairbanks Thursday. This year, with a milestone. It’s been 50 years since Alaska Natives banded together to reclaim lost lands, a bond forged through long hours, and endless determination. “We took the heat, the criticism, the negative editorials,” remembered Emil Notti, one of […]

  • Politics

    ‘I am so done with it’: Voters feeling fatigued this election season

    by Bonney Bowman on Oct 20, 18:43

    With the final presidential debate wrapped up and the presidential election only 18 days away, the candidates have a short time left to win over voters. But do voters want to be won over? Or are they just over this election? Election fatigue is when people start feeling exhausted by non-stop coverage. The Pew Research […]

  • On-Air

    Reality Check w/ John Tracy: It’s time Anchorage gets excited about Uber

    by John Tracy on Oct 20, 16:26

    On a recent trip outside Alaska, I decided to find out what all the fuss was about concerning the ride sharing company Uber. I’m not the most technically savvy guy, but even without the help of my teenager, I downloaded the app and reluctantly gave Uber my credit card number. When I arrived at the […]

  • News

    Alaska Native remains could return home from Pennsylvania

    by Associated Press on Oct 20, 14:46

    A small group of people are working with the U.S. Army to bring home the remains of 15 Alaska Natives who attended a boarding school in Pennsylvania more than a century ago. The Carlisle Industrial Indian School was founded in 1879 by Richard Henry Pratt. The Army officer created the military-style school on the belief […]

  • News

    Crews hope to reach full containment of Moose Creek Fire by weekend

    by KTVA CBS 11 News on Oct 20, 13:12

    Last updated at 2:40 p.m. on Thursday, Oct. 20   The latest fire map from the Alaska Division of Forestry shows the Moose Creek Fire is 70 percent contained as of Thursday afternoon. “If (weather) stays the way it is right now we’re hoping for full containment by the end of shift Friday,” Phil Blydenburgh, Incident […]

  • Weekend concert to benefit Alaska Music Project for Youth

    by Daybreak Staff on Oct 20, 12:58

    Just how easy is it to record a song? J.W. Frye and Matthew Brenna with Alaska Music Project for Youth (AMP) showed Daybreak how it’s done. The organization is also holding a benefit concert, with headliner Black Water Railroad Company, on Oct. 22 at Williwaw. Proceeds will help AMP hit its goal of 18 mobile […]