Encouraged by new governor, borough remains confident in LNG plans

Nov 21, 2018

 

AGDC officials point out the new path for the Kenai Spur Highway through Nikiski at a 2018 public meeting. The reroute is just one of several major projects that will have to be completed before an in-state gas line becomes a reality.
Credit Shaylon Cochran/KDLL

With a new administration set to begin work in Juneau next month, state leadership for the AK LNG project is beginning to change, too.

Governor-elect Mike Dunleavy has named former governor Sean Parnell to head up the project. The path for a new gas line changed after Parnell left office in 2014 and the big oil companies on the North Slope had a hard time making a business case for more investment.

But a new limited liability corporation under the umbrella of the Alaska Gasline Development Corporation gives investors a place to put up capital for the project, should they choose to do so. The Kenai Peninsula Borough’s Chief of Staff, John Quick, is optimistic that the project will continue on its aggressive timeline under new state leadership.

“Former Governor Sean Parnell is, in my opinion, an expert in the matter. He’s been around the block. I think he’s going to be able to shore up some of these things that need to happen and some of that is the funding model. He’s going to offer a different perspective than maybe what the current administration has.”

It's unclear what Parnell's role will be beyond issuing a status report on the project early next year. But 2019 could potentially see some advancement. A first draft of the environmental impact statement for the project is expected in February, however a lot of other questions remain.

 

The state has stayed pretty mum on its contract negotiations for buyers for the natural gas. It’s been in talks with more than a dozen companies, but so far, the biggest move has been a non-binding joint development agreement signed with major players in China last year.

 

Closer to home, the basics for the project have yet to be finalized and the project still needs to secure some 900 acres of land in Nikiski for export facilities. Quick says he’s confident that after the Federal Energy Regulatory Commission begins releasing its findings about the project, issues like land acquisition will be sorted out quickly.

“As soon as the FERC filing comes out and as soon as somebody writes a check, you’ll probably see AGDC buy that land from AK LNG.”

At the federal level, the project is seen as an important part  in the Trump administration’s trade dispute with China. Quick and others from the state recently met with Trump to discuss Alaska-specific issues.

“It’s a project that the President has said this needs to be a priority. FERC was very clear that the President is the one behind moving the project calendar up to speed. When you have the President saying this project needs to happen, it’s probably going to happen. The folks at FERC were very nice, very pleasant, subject matter experts. And I think they’re looking to have this project move as fast as humanly possible.”

Whether that’s the same speed at which investors and buyers can be found and remaining regulatory hurdles can be overcome remains to be seen.