• 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

    New housing development set to break ground near downtown Anchorage

    by KTVA CBS 11 News on Jan 23, 22:53

    Plans for a new housing project near downtown Anchorage are well underway, according to its developer.  Known as Downtown Edge, the development is part of a larger project designed to improve an area between downtown and the Port of Anchorage. Downtown Edge will consist of 28 townhouses that will boast a view of Mount Susitna, […]

  • News

    Anchorage skier killed by avalanche in Canada

    by KTVA CBS 11 News on Jan 23, 22:50

    A 32-year-old Anchorage woman died in Canada Saturday morning after she and two friends were caught in an avalanche. The group had been skiing in the back country near Qua Peak in British Columbia when the avalanche occurred, according to a statement from the Royal Canadian Mounted Police (RCMP). “The three were described as experienced […]

  • Troopers: Home invasion turns into homicide investigation

    by KTVA CBS 11 News on Jan 23, 21:29

    What was initially reported by Alaska State Troopers as a home invasion and shooting has since become a homicide investigation. In an online dispatch published Monday morning, troopers said the incident was reported at 8:47 p.m. on Sunday in Soldotna. One person was injured and taken to Central Peninsula Hospital with life-threatening injuries, the Peninsula […]

  • Caught on camera: Midtown store burglarized for third time

    by Eric Ruble on Jan 23, 20:50

    Employees at the Nutz Gadget store in midtown Anchorage are frustrated. Early Saturday morning, thieves burglarized the business for the third time in less than six months. Thankfully, the store’s security cameras captured the entire incident. In the footage, two people can be seen approaching the store and breaking a hole in the front door’s […]

  • Lifestyle

    Lithium batteries the culprits in Samsung Note 7 debacle, company finds

    by Kris Van Cleave / CBS News on Jan 23, 20:28

    It was overheating Samsung Galaxy Note 7 incidents that prompted a worldwide recall and months-long investigation by 700 Samsung engineers. Over 200,000 devices and more than 30,000 lithium-ion batteries were tested. Samsung found that a design defect — incorrect battery positioning in the Galaxy Note 7’s upper right corner –caused the first wave of problems. […]

  • Politics

    BP signs cooperation agreement with state to advance gas project

    by Liz Raines on Jan 23, 20:15

    Alaska’s plans for a liquefied natural gas pipeline got a bit of a boost Monday. Oil giant BP and the state have inked a new agreement that calls for BP to assist the state in finding financing for its gas project, known as AKLNG. In August, BP, ConocoPhillips and ExxonMobil announced they were ending their […]

  • News

    Anchorage crews repair hundreds of street signs damaged by drivers

    by Heather Hintze on Jan 23, 19:51

    Drivers having a tough time on snowy roads have been taking a toll on street signs. The municipality’s Paint and Sign Shop reported 971 repairs so far this winter; last winter crews repaired 1802 signs. As the snow piles up around town, the orders at the shop start to stack up too. “There’s your perfect […]

  • Lifestyle

    Heavy snow not a big concern for Anchorage roofs yet, company says

    by Lauren Maxwell on Jan 23, 19:47

    A local roofing company said most Anchorage residents don’t need to start shoveling their roofs yet, or worry too much about the snow load. Jason Dial, with Rain Proof Roofing, said in most circumstances, the company recommends shoveling when snow reaches a height of about 32 inches. He said most people in Anchorage still have […]