Special session on gas issues scheduled to start Saturday

  • By BECKY BOHRER
  • Thursday, October 22, 2015 10:44am
  • NewsBusiness

JUNEAU — The Alaska Legislature is set to convene for its third special session this year, this time to consider a buyout of one of the state’s partners on a proposed multibillion-dollar liquefied natural gas project.

Legislators had been expecting a fall special session to deal with gas-line issues, but they will not be presented with contracts as once hoped, since key agreements have yet to be reached between the state and its partners. The special session agenda set by Gov. Bill Walker has the proposed buyout of TransCanada Corp.’s interest in the project as well as a gas reserves tax, which the governor has characterized as a way to make sure the project can’t be stalled if a company doesn’t allow for gas it controls to be commercialized.

Legislators said they’d hoped to get details on Walker’s proposals well in advance to begin delving in. The special session is scheduled to begin Saturday in Juneau. Walker spokeswoman Katie Marquette said bills will be released before the start of the session.

The project being pursued by the state, BP, ConocoPhillips, Exxon Mobil Corp., the Alaska Gasline Development Corp. and TransCanada is the latest iteration of a gas line that’s been seen as a way to shore up revenues in a state heavily reliant on oil. A prior effort, for which TransCanada had an exclusive license with Alaska, fizzled out amid concerns with the North America gas market. The current project would aim to serve overseas markets.

Under an agreement predating Walker’s administration, TransCanada would hold 

Alaska’s interest in the pipeline and gas treatment plant, with the state having an option to buy back part of that interest. The agreement also contains language allowing the state to terminate the arrangement, though it would have to reimburse TransCanada for development costs, plus 7.1 percent. Walker, who has been vocal in wanting Alaska to have a greater say in the project, has estimated buy-out related costs in the $100-million range.

TransCanada’s inclusion was cast as a way for the state to lessen its share of upfront costs. It also gave the parties a way to get out of the prior, failed gas line arrangement without a messy fight.

Rep. Craig Johnson, R-Anchorage, who serves on the House Resources Committee, said the costs, potential benefits and risks of any buyout need to be examined closely, a point echoed by others.

Sen. Bill Wielechowski, D-Anchorage, said that as the potential cost for state participation goes up, the scrutiny goes up, and legislators will have to feel a certain degree of comfort with what they choose to do.

“The governor needs to justify that this is within our fiscal means,” said Sen. Cathy Giessel, R-Anchorage, and chair of the Senate Resources Committee.

Alaska is grappling with multibillion-dollar deficits amid low oil prices and has been using savings to get by. Administration officials have cited the importance of Alaska maintaining its high credit rating as it pursues the mega-project.

“I think this is going to be an emotional debate involving politics and economics and risk taking and market perceptions and the hope and expectations of a gas line project for Alaska,” said Larry Persily, a former federal coordinator for Alaska gas pipeline projects. 

BP and Exxon Mobil have said a reserves tax would complicate efforts to advance the project. Legislators, in interviews this past week, said they wanted to see exactly what Walker had in mind with regards to that issue. 

Several said they were caught off guard by the inclusion of that issue on the special session agenda.

House Majority Leader Charisse Millett, R-Anchorage, said she would like Walker to be more open with legislators. “We all have to work together,” she said.

As for logistics, the Capitol, which has been undergoing renovation, will be ready to host the special session, said Pam Varni, executive director of the Legislative Affairs Agency. The House and Senate chambers and most legislative offices will be ready, but some members will be in temporary quarters, at least initially, at the Capitol or nearby, she said.

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