Natural Gas Authority audit prompts rebuttal from board chair

Posted: Tuesday, December 28, 2010

A state legislative audit that suggested the voter-created Alaska Natural Gas Development Authority may be on the cusp of outliving its usefulness and has "stretched the bounds of its statutory authority" drew a sharp rebuttal from its chairperson. The Division of Legislative Audit study recommended that the Legislature study whether the time is coming to end the public corporation's mission.

It was created following voter passage of Ballot Measure 3 in the November 2002 General Election. The audit suggests legislators consider whether to start shutting down the panel, which has no "sunset" provision ending its existence, once the AGIA and Denali open seasons conclude and the pipeline plan is complete.

ANGDA works to get North Slope gas to Alaska communities and identify feasible development opportunities for liquid natural gas. Its mission is to "develop a natural gas pipeline from Prudhoe Bay to tidewater on Prince William Sound and a spur line to the gas distribution grid in Southcentral Alaska," its Web site states.

The gas authority initially looked at building a supply pipeline, but auditors said the gas authority changed its goal "to focus on a pipeline that would spur off a larger pipeline" that would access North Slope gas. Auditors found the agency did not take the lead and has no leading role in acquiring natural gas, processing it or in building a pipeline.

"ANGDA's decision to pursue a spur line minimized its role in accomplishing its fundamental mission. It also resulted in ANGDA conducting activities that stretched the bounds of its statutory authority," the audit stated.

It further faulted the gas authority for its work with the Office of the Governor, which was pursuing a small-diameter in-state natural gas pipeline.

"This lack of cooperation resulted in both entities pursuing alternative projects that would achieve the same objective," the audit found.

ANGDA Board Chairman Scott Hayworth sent a three-page rejoinder last month to Mark Lundahl of the Division of Legislative Audit stating, in part, that ANGDA's plans changed in response to the ever-changing plans, policies, priorities and funding put forth by the governor and the Legislature.

"ANGDA's pursuit of projects separate from the mainstream gas supply projects and as alternatives is meaningful to a significant minority of Alaskans and is essential to ensuring statewide energy solutions. Furthermore it provides an evenhanded distribution of our state's resources," Heyworth wrote.

Heyworth said the Authority he chairs plays "multiple roles in helping get North Slope gas to market" and protect the rights of Alaskans as the state moves forward to provide secure sources of energy.

"A legislative discussion aimed at improving the State of Alaska efforts on gas lines, in-state gas, and meeting citizen-consumer energy needs requires more than a simplistic elimination of an organization, particularly one that has consistently and steadily represented the interests of Alaska's citizens as consumers," the letter stated.

The authority noted it is the only party "that has stepped forward to participate in the time-critical open seasons held by APP and Denali to address in-state gas needs." The authority is also negotiating with BP-ConocoPhillips and TransCanada-Exxon Mobil on behalf of rail belt electricity providers for natural gas shipping capacity on gas pipeline projects sponsored by those corporate entities.

Auditors also faulted the accuracy of some of the gas authority's financial reporting. Heyworth said the Authority is already working with the state's Department of Revenue to restate its assets and has hired an outside accountant to create new financial reporting guidelines.

ANGDA's Board of directors meets again at 9 a.m. on Jan. 12 in its offices at 411 W. 4th Ave. in Anchorage.

The audit was one of five released by the state on Dec. 14. Three other audits recommended three professional regulatory boards should continue, and the fifth criticized data reporting measures utilized by the Regulatory Commission of Alaska. The audit found that reporting errors at the data entry level caused errors in the RCA's fiscal year 2009 final report regarding compliance with statutory time lines, time line extensions and reported performance measures. Auditors recommended better training and guidance for employees who put data into the case management system.

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