• 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

    North Korea missile launch attempt fails, U.S., South Korea say

    by CBS/AP on Mar 22, 21:18

    North Korea’s latest missile launch ended in failure on Wednesday, the U.S. and South Korean militaries said, three days after the North claimed a major breakthrough in its rocket development program. The reported launch failure comes as the North is angrily reacting to ongoing annual U.S.-South Korean military drills that it views as an invasion […]

  • News

    New languages considered for ASD immersion program as lottery deadline looms

    by KTVA CBS 11 News on Mar 22, 21:15

    Parents in the Anchorage School District have shown enough interest in immersion programs that the district is considering adding other languages. “The three languages that continue to come up are Korean, Arabic and French,” explained the program’s director, Brandon Locke. He said one thing working in the district’s favor is the “cost.” “People think this […]

  • News

    Mat-Su Borough Assembly takes 2 parks off trapping ban list

    by KTVA CBS 11 News on Mar 22, 20:33

    The Matanuska-Susitna Borough Assembly voted Tuesday night to change an ordinance on trapping in the borough that was passed recently. The Assembly had approved a measure to ban trapping near school grounds and trails in eight local parks, but Assembly member Randall Kowalke requested a reconsideration of the ordinance less than 24 hours later. He […]

  • News

    Renovations planned for UAS Ketchikan maritime facilities

    by Associated Press on Mar 22, 20:22

    Construction is expected to start later this year on a nearly $6 million overhaul of University of Alaska Southeast Ketchikan’s Regional Maritime and Career Center. The Ketchikan Daily News reports that Wendy Miles Horn, with the university, says the work is needed because the two buildings that make up the facility are inadequate, cramped and […]

  • Politics

    New fiscal plan pays out $1,900 PFD, but faces grim future

    by Liz Raines on Mar 22, 20:20

    There are now more than a handful of proposals in Juneau on how to use the permanent fund to solve the state’s multi-billion dollar budget shortfall. The latest is one unveiled by House Republican minority Wednesday morning, day 65 of the legislative session. House Bill 192 avoids a steep cut to dividends next year by using less […]

  • Police: Shooting at Fairbanks library confused for phone charger explosion

    by KTVA CBS 11 News on Mar 22, 19:48

    An afternoon at a Fairbanks library took a strange turn when a man was injured by what was at first thought to be an exploding phone charger, but turned out to be a bullet, according to police. At 1:15 p.m., Fairbanks fire crews responded to the Noel Wien Library on Cowles Street after receiving a report […]

  • Lifestyle

    Humpback whale population growing near Homer

    by Melissa Frey on Mar 22, 19:18

    Kachemak Bay, Alaska’s first state park, is known for it’s towering mountains, sandy beaches and rich marine habitat, which are all visible from the Homer Spit. Karl Stoltzfus has lived there for nearly 50 years and has been offering wildlife excursions for more than two decades. He says they traditionally look for humpbacks at the end […]

  • News

    Longtime leader of Sealaska board to step down

    by Associated Press on Mar 22, 18:59

    Southeast Alaska’s regional Native corporation Sealaska is losing one of its longest-serving leaders. KTOO-FM reported Wednesday that Rosita Worl will step down in June after 30 years on the Juneau-based corporation’s board of directors. Worl says she has thought about leaving her post for some time and is looking forward to completing various academic projects. […]