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Legislature ponders buying one quarter of gas pipeline

Posted: March 11, 2014 - 11:04pm
Department of Natural Resources Commissioner Joe Balash, right, and Department of Revenue Deputy Commissioner Mike Pawlowski, left, answer lawmakers' questions during a Senate Finance Committee meeting Tuesday about changes to SB138 which sets the parameters for the proposed Alaska LNG project going forward.  MATT WOOLBRIGHT | JUNEAU EMPIRE
MATT WOOLBRIGHT | JUNEAU EMPIRE
Department of Natural Resources Commissioner Joe Balash, right, and Department of Revenue Deputy Commissioner Mike Pawlowski, left, answer lawmakers' questions during a Senate Finance Committee meeting Tuesday about changes to SB138 which sets the parameters for the proposed Alaska LNG project going forward.

The Alaska Legislature is expected today to move one step closer to buying one-quarter of a trans-Alaska natural gas pipeline.

Late Tuesday, the Senate finance committee discussed an updated version of SB138, the pipeline bill. The latest version of the measure includes language setting the state’s participation in the project at 25 percent.

SB138 was introduced by Republican Gov. Sean Parnell’s administration and was developed from a pair of agreements with private companies slated to work with the state to develop the project.

As planned, the pipeline project would include a gas conditioning plant on the North Slope, a pipeline running south between Fairbanks and Anchorage, and a shoreline natural gas liquefaction plant at Nikiski. The projected cost of the project is somewhere between $45 billion and $60 billion.

“(Legislators have) done an excellent job turning the issues, challenging the administration and a lot of credit, I think, goes to their consultants to working very hard to put together a picture for the committee,” said Mike Pawlowski, deputy commissioner for the Department of Revenue.

No action was taken Tuesday, but the committee is expected to adopt an updated version of the bill today similar to that discussed at the meeting Tuesday. The bill is scheduled to be heard in House committees this week.

If approved, the legislation will advance the project into engineering and design phases.

Aside from the gas tax rate, the revised bill includes other significant changes from the original SB138.

The new language removes the notion of creating a subsidiary of the Alaska Gasline Development Corporation to handle pipeline issues. Instead the amended bill will create a director position within the corporation to oversee the project.

The AGDC is a state-created entity tasked with pursuing an in-state natural gas pipeline project as a backup plan in case the large pipeline falls through. The corporation is working on that smaller pipeline, but its top goal is to secure the larger pipeline.

“What you have now is two projects under the same umbrella,” Pawlowski said.

Municipalities throughout the state have urged lawmakers to allow them the opportunity to negotiate their own deals for pipeline property taxes and other fees. The updated bill asks the governor to consult with municipal stakeholders during the contract-development process, Sen. Anna Fairclough, R-Eagle River, said.

“We left the gate open for the greatest flexibility going forward,” Fairclough said. “We don’t want (municipal governments) to have a veto power where one holds out for 10 cents more and we don’t have a project. We’re all in this together.”

Sen. Lesil McGuire, R-Anchorage, introduced legislation earlier this session that proposed allowing Alaskans to invest portions of their Permanent Fund Dividends into the project, and an expansion of that concept is in this version of SB138.

The provision calls for the Department of Revenue to develop a plan where individuals, municipalities and Native corporations can invest in the project, Pawlowski said.

“We’ll have a plan for Alaskans to get directly involved for the Legislature to consider when the rest of this comes back,” he told the Empire.

Contracts associated the project will likely be presented to legislators late next year, he added.

The bill also tasks the Alaska Energy Authority with developing a plan to better provide energy to portions of the state that are not in the direct reach of the proposed gas pipeline.

Legislators are expected to examine the costs of these changes today.

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