Lawmakers will meet three times this week in an attempt to grasp the intricate details of a bill that aims to keep Alaska’s liquefied natural gas line project moving forward.
Senators on the Senate Resources Committee discussed SB138 for the first time Friday, and the committee has scheduled more hearings Monday, Wednesday and Friday of this week.
The bill essentially asks the Legislature to answer three questions related to the liquefied natural gas plant and pipeline tentatively planned for the northern edge of the state.
The first question seeks to decide if the state going to participate in the project. If that’s a yes, the second relates to how much of a percentage ownership the state wants to take on — the range is 20 to 25 percent.
The last third of the bill outlines the process going forward with contract drafting and negotiating.
“We’re taking a pause in the development of the project,” said Mike Pawlowski, deputy commissioner at the Department of Revenue. “We’re taking it to the Legislature to discuss these three basic things, and decide if we’re going to move the project forward.”
The project has a long history — and one that raised questions at Friday’s hearing, specifically about the state’s partnership with arctic pipeline builder TransCanada.
Sen. Hollis French, D-Anchorage, questioned Pawlowski and Department of Natural Resources Commissioner Joe Balash about the merits of the partnership during the bill’s first committee hearing.
If SB138 passes, TransCanada will be putting forward between $53 million and $67 million for the next phase of the project. The company already did approximately $130 million in work during the Alaska Gasline Inducement Act phase.
“They’re, in a sense, using their cash when they could get higher return on it elsewhere,” Balash said. “They also have staff working on this effort, and that means those employees won’t be doing something else.”
Still, at every legislative break in the project timeline — now, in 12 to 18 months and again in two to three years — the state has the option to buy out TransCanada’s involvement to that point.
The buy-out clause at this point is centered on the $130 million in data previously collected by TransCanada.
“This is a phased process where each party takes a step back and decides whether to proceed with the project momentum,” Pawlowski said.
Should the state or one of the major corporate partners — TransCanada, ConocoPhillips, BP or ExxonMobil — decide to opt out of the project and effectively end the development, the data collected will be valuable for future efforts, Pawlowski added.
Work is also continuing in the early stages on a smaller gasline project based around natural gas near the Cook Inlet in Southcentral Alaska, but that project is largely viewed as a backup should the significantly larger Alaska LNG project not come to fruition.
“If producers were to try to leverage us — do it the way we want or there’s no gas for Alaskans —we have another source we can work with,” said Sen. Fred Dyson, R-Eagle River. “It’d be an expensive one and tough one, but we’ve got it.”
Still, SB138 clearing the Legislature does not mean the Alaska LNG project will definitively happen — it means the next phase will begin.
“There could be something that completely upsets the economics or the appetites of the commercial parties,” Balash said. “We can’t predict that.”
Monday’s meeting on the bill is expected to look at potential revenue in the future, and the Senate Resource committee is scheduled for 3:30 p.m. in Butrovich 205.
• Contact reporter Matt Woolbright at 523-2243 or at firstname.lastname@example.org. Follow him on Twitter @reportermatt.