• Forecast
  • News Tip
  • Categories
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
JUNEAU –

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

    Ferry riders on Southeast route to see new ticket policy

    by Associated Press on Dec 02, 8:58

    The Alaska Marine Highway System is changing the way passengers pay for ferry sailings on a Southeast Alaska route starting next year. CoastAlaska News reports that ferry spokesman Jeremy Woodrow says those riding the small Lituya will pay for a round trip to go one direction and get a free trip on the way back. The […]

  • News

    Rescuers carry down skier after injury at Turnagain Pass

    by Associated Press on Dec 02, 8:07

    A 36-year-old Anchorage skier was carried to safety after an injury at Turnagain Pass. Alaska State Troopers say emergency responders in Soldotna on Wednesday received a call that Brett Harvey had been injured on Seattle Ridge and could not hike down. The nature of the injury was not disclosed. The Alaska Mountain Rescue Group, Anchorage […]

  • News

    Alaska aims to ban smoking in public housing by spring

    by Associated Press on Dec 02, 7:45

    The federal government is giving public housing agencies nationwide 18 months to implement a ban on smoking, but the state of Alaska is looking to crack down on tobacco much sooner. KYUK-AM reports the director of the Alaska Housing Finance Corporation, Cathy Stone, says the state’s ban on smoking in public housing developments could take effect […]

  • Streaming sports gets easier as NFL comes to CBS All Access

    by Associated Press on Dec 01, 21:44

    NEW YORK (AP) – CBS says NFL games are coming to its CBS All Access subscription service, making it a little easier for “cord cutters” to watch football without a pricey cable subscription. Games aired on CBS will be available for streaming on tablets, to TVs and on cbs.com starting Sunday, if customers live in […]

  • State sponsors de-escalation training for officers

    by Lauren Maxwell on Dec 01, 21:14

    Being able to keep people calm is an important skill, especially if you work in a prison. It’s one reason why the Alaska Department of Corrections is sponsoring a four-day training in Palmer, where corrections officials and other law enforcement officers are learning to use their words instead of their weapons. The state is paying a Milwaukee […]

  • Lifestyle

    Alaska observes World AIDS Day

    by Bonney Bowman on Dec 01, 20:31

    Thursday is World AIDS Day, a time to remember those lost and support those living with the disease and commit to preventing its spread. The Four A’s, Alaska’s AIDS support group, says it currently serves around 260 people in Alaska who live with HIV or AIDS. The group also works to educate people about prevention and the importance […]

  • News

    Small oil company delays loan repayment after Walker cut tax credits

    by Liz Raines on Dec 01, 20:22

    Last summer, Gov. Bill Walker postponed hundreds of millions of dollars in oil tax credit payments for the second year in a row. “We just didn’t have the cash flow to fund those at this point,” Walker explained after announcing the budget veto in July. Now, companies that were counting on those credits say they’re feeling […]

  • News

    Demolition begins on old Iditarod Elementary

    by Shannon Ballard on Dec 01, 19:36

    It’s the end of an era for some in the Mat-Su Borough School District. The old Iditarod Elementary School is being torn down. For years, there has been talk about what to do with the building, once students moved into a brand new building down the road. For a while, the Wasilla Police Department was […]