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Alaska House Resources Advances Gas Line Bill

Following an intensive amendment process that began last week, the House Resources Committee passed out its rewrite of a bill aimed at advancing a major liquefied natural gas project.

JUNEAU, Alaska (AP) — Following an intensive amendment process that began last week, the House Resources Committee on Wednesday passed out its rewrite of a bill aimed at advancing a major liquefied natural gas project.

The committee considered dozens of proposed amendments and debated many of them at length — even some that were ultimately withdrawn — over the course of several days.

Co-chair Dan Saddler, R-Eagle River, said he thought Alaskans could take comfort that the committee did "good, hard work." Rep. Peggy Wilson, R-Wrangell, said she thought the bill was fair to all concerned.

Other members expressed mixed feelings. Rep. Craig Johnson, R-Anchorage, said he saw this as a way forward in pursuing a long-hoped for gas line project. But he said he still had questions about ownership and control. He encouraged the Parnell administration to make sure this was the best deal the state could get. He said he wasn't sure it was but if he knew a better way, he would have offered options.

The bill, SB138, from Gov. Sean Parnell, would set state participation in the project, also being pursued by the North Slope's major players, TransCanada and the Alaska Gasline Development Corp., or AGDC, at about 25 percent. It also is aimed at moving the project — currently estimated to cost between $45 billion and more than $65 billion — into a phase of preliminary engineering and design and cost refinement.

As proposed, AGDC would hold the state's interest in liquefaction facilities. TransCanada would hold the state's interest in the gas treatment plant and pipeline, with the state having an equity buy-back option.

The arrangement with TransCanada has been cast by the administration as a way for the state to not have to bear as much in upfront costs as it would without a partner. It also has been billed as an amicable transition from terms of the Alaska Gasline Inducement Act, under which TransCanada pursued a project for years. Parnell has said terms of the inducement act do not fit with the project now being considered.

TransCanada and the administration have repeatedly defended the proposed partnership. In House Finance on Wednesday, when asked if TransCanada was something of a third-wheel, the company's Tony Palmer said TransCanada brings value to the state in terms of expertise and experience in working in Arctic environments. The administration also has argued that TransCanada would be aligned with the state's interest in supportpipeline expansion.

House Finance will also review the bill.

SB138, as rewritten in House Resources, would require negotiated contracts that need legislative approval be made public at least 90 days before their proposed effective date. It would require regular legislative briefings on progress, accompanied by a written report on the amount of money the state may be obligated to pay TransCanada Corp. if a project were terminated before gas starts flowing. It also would not allow for payments in lieu of taxes on existing oil and gas infrastructure, like the trans-Alaska pipeline system, an issue that's been a concern of several mayors whose communities will be impacted by the project.

One issue that seemed to cause continued concern for several Resources members was a provision in an agreement signed between the state and TransCanada that would give the company right of first refusal for five years if the state terminated the relationship.

Palmer has said that obligation would not apply if the state exercised its right to termination before approval of a firm transportation services agreement. Such an agreement would be subject to legislative approval.

Attempts to further clarify the right so that it would not apply to a smaller, in-state line that AGDC is currently pursuing, failed in committee.

Natural Resources Commissioner Joe Balash expressed concern with an amendment that would give the state access to data developed under a contract or agreement in which the state participated financially if the commissioner determined the project was not making adequate progress toward a final investment decision. Balash said he believed the intent of the provision, offered by Rep. Paul Seaton, R-Homer, was to give the state leverage "that is not quite nuclear hand grenade, but almost."

He said he could see it being useful but also causing problems in reaching agreements on the front end over how that leverage could be used.

Balash, in an interview, said he didn't think any of the amendments were "fatal" to the bill but said officials would be examining the bill closely and talking with the other parties.

He said one of his concerns now is with time, noting that Finance also still has on its plate the capital budget, another big, remaining piece before the scheduled end of session April 20. He said the administration has been able to explain in other committees why the relationship with TransCanada is in the state's interest, and said he was confident he and other officials could do that with Finance members, too, given enough time.

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