Alaska Senate advances trans-Alaska gas pipeline proposal

The Alaska Senate has voted to advance a proposed trans-Alaska natural gas pipeline project. If approved by the Alaska House of Representatives, the project will enter a period designed to determine its economic feasibility.

The 15-5 nod of approval followed more than six hours of debate on the Senate floor and 23 hearings over the past four-and-a-half weeks.

The proposal gives the state a 25 percent share of the project with portions also held by pipeline builder TransCanada.

“Your vote matters today,” Sen. Anna Fairclough, R-Eagle River, told lawmakers shortly before the vote. “It is a historic opportunity to be part of moving Alaska forward both economically and energy-wise.”

Republican Gov. Sean Parnell proposed the legislation earlier this year after the state signed tentative agreements with TransCanada and the three main North Slope producers — ExxonMobil, BP and ConocoPhillips.

While there were no vocal opponents to the concept of the project, Democrats and some Republicans had reservations about various parts of the proposal.

Democrats offered 16 amendments to the bill on an array of issues. The Republican majority nixed all 16 proposals as senators from both sides voted with the opposite party on various proposals.

“We go from being king to being a minority shareholder,” said Sen. Hollis French, D-Anchorage, and the minority leader. “We should be driving this train; instead, we’re the caboose.”

A clause in the documents signed by the state last year with TransCanada and the producers states that the contracts are contingent upon enabling legislation that is acceptable to all parties.

“Acting like a sovereign means we should never, ever give the oil industry the authority to veto the laws we put in place,” said Sen. Bill Wielechowski, D-Anchorage.

Under one of the amendments offered by French and his Democratic colleagues, the state would assume a majority ownership in the project — an idea supported by some Republicans, but not one that is feasible, the finance committee co-chair said.

“We can’t be a business partner at the level we want because we don’t have enough money — even if we’re going to just take a chunk of this thing, we don’t have enough money,” said Sen. Pete Kelly, R-Fairbanks.

The solution offered was to partner with TransCanada whose incentive is to get more gas moving through the pipeline, which makes it the “best partnership we could be in,” Kelly said.

Still, the involvement of TransCanada was a sticking point for many Democrats who opposed the bill. It was also the reason Republican Sen. Bert Stedman of Sitka sided with Senate Democrats in voting against the bill.

“A sole source, non-competitive bid resulting in a multi-generational contract with TransCanada is not in the state’s best interests,” Stedman said in his press release explaining his “no” vote. He added that the state should shelve the bill and take it up next year.

“We have the time and the obligation to do it right,” he said.

A core issue raised by local governments — the ability of municipalities to influence the taxes and fees owed to them — was addressed in an amendment to the original bill during the committee phase, but not well enough in some lawmakers’ eyes.

Democrats proposed an amendment that would give the local governments a more powerful role than an advisory adopted by the committee.

“Property owners will be highly, highly unhappy when they find out that way back in 2014 that this legislature crippled the ability of their municipality to get a fair price out of their share of the pipeline,” said French.

Fairclough previously told the Empire that giving municipalities “veto power” could allow single communities to hold out for small amounts of money that could jeopardize the project’s chances.

That sentiment was echoed in response to the amendment on the floor Tuesday by Sen. Fred Dyson, R-Eagle River, when he said there needed to be safeguards to stop “opportunists” who may try to get “way more than their fair share.”

Another amendment would have expressly prohibited the producers from using infrastructure designed specifically for natural gas work as a write-off on their oil taxes.

“Without this amendment, gas expenditures will be like a shark swimming through our oil taxes,” Wielechowski said. That proposal failed on a 4-14 vote.

Amendments that would have changed oil tax rates, reduce the state’s risk in the project by changing the terms of the agreement with TransCanada and install a project labor agreement in statute all failed.

The final amendment proposed aimed to prohibit the state from negotiating decades-long tax guarantees in contracts, but it also failed.

Republicans said many of the concerns raised by Democrats were either covered in the legislation and agreements with the project partners, or they are things that will be sorted out later in the project timeline.

Sen. Peter Miccichie, R-Soldotna, told the body that all the details were not yet known on the project, and that the bill was not intended to answer everything as it represents a “path forward.”

“Alaskans cannot afford to wait any longer,” Sen. Lesil McGuire, R-Anchorage, said, adding, “It’s the right market. It’s the right participants.”

The bill now moves to the House of Representatives for consideration. There is just over one month left in the legislative session.

• Contact reporter Matt Woolbright at 523-2243 or at matthew.woolbright@juneauempire.com. Follow him on Twitter at https://twitter.com/reportermatt.

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