An energy consulting firm says several changes to state law may be needed to boost the outlook of the Alaska gasline project. State lawmakers enlisted the United Kingdom-based GaffneyCline to advise them on multiple energy issues, including the Alaska LNG Project. The firm presented its recommendations to the Legislative Budget & Audit Committee last week.
Anchorage Democratic Sen. Elvi Gray-Jackson chairs the committee.
“So let me set the stage for this presentation,” she said. “With the legislature likely to face key questions or requests for action in support of the Alaska LNG Project, and given the developer’s compressed time for an early FID, swift legislative action may be needed.”
FID refers to a final investment decision. Glenfarne Group, the project’s majority owner, has said it will decide by the new year.
If it’s built, the Alaska LNG Project would treat natural gas on the North Slope, move it south through a roughly 800-mile pipeline and then liquefy and export it from Nikiski. The first phase is what project leaders are focusing on right now, and only refers to construction of a pipeline for in-state energy demands.
Nick Fulford presented on behalf of GaffneyCline. He says property taxes, production royalties and permitting are all areas state lawmakers may need to address.
“One way the state can approach this is to start with a clean sheet of paper and evaluate all these different features, including affordable energy for the state, and design a framework which is fit for purpose and creates that equitable split between the project developers and the state,” he said.
The firm also floated tariff setting and credit support as other ways state lawmakers might lend the project a hand. Fulford says “almost all” of the proposals would need to be enacted before a final investment decision is made.
House Speaker Bryce Edgmon, an independent from Dillingham, says that’s unrealistic given Glenfarne’s timeline.
“I can't fathom, unless the governor, God forbid, calls us into a special session on December 17, 19, that we would have the kind of time in a 24-hour a day to entertain these sorts of issues before FID,” he said. “And if that’s a requirement, this just isn’t – we can’t do it even if we wanted to.”
It’s technically possible for lawmakers to convene before the anticipated Jan. 1 development decision. They could call themselves into a special session with a two-thirds vote or Gov. Mike Dunleavy could call them. But state law says the governor must give lawmakers a 30-day heads up beforehand. That leaves little time for policymaking.
Senate Majority Leader Cathy Giessel is a Republican from Anchorage. She says the firm’s recommendations differ from what state lawmakers have heard before.
“We haven't heard from Glenfarne or AGDC that any kind of fiscal changes to our tax structure need to be made,” she said. “I mean, this is kind of new information to me. I mean, maybe somebody else has heard it, but I haven't.”
Multiple lawmakers also said the state’s ability to financially support the project is limited given dismal revenue forecasts. When Glenfarne took over majority project ownership, the state-run Alaska Gasline Development Corporation retained a 25% ownership stake.
In a statement, a Glenfarne spokesperson said project leaders are meeting regularly with state lawmakers to consider policy proposals. The Alaska Legislature is scheduled to reconvene in late January.
