Trevor Fulton ~ At this very moment a power struggle is occurring in the state capitol between the Governor and the Legislature, the outcome of which could determine the fate of Alaska’s long-dreamed-of natural gas pipeline project.
Last legislative session the state entered into a partnership with pipeline builder TransCanada and the three main North Slope oil producers –ExxonMobil, BP, and ConocoPhillips – to pursue what’s being called the “Alaska LNG Project.” This $45-to-$65 billion mega-project would involve piping gas to Southcentral Alaska, liquefying it, and shipping it to Asian buyers.
This legislative session Governor Walker used his executive authority to ramp up efforts to develop a “Plan B” gasline project that would serve as a fallback in case the Alaska LNG Project stalled out. Although focused on providing natural gas to Alaskan communities, this smaller project would also include an LNG export component. It would be developed by a state-run corporation and funded by the state.
Sounds like a great idea, right? Developing North Slope natural gas and building a massive gasline project would create thousands of good-paying jobs, present a long-term solution to the state’s budget woes, and drive the state economy for decades to come. Why wouldn’t the state want to ensure that a gasline – any gasline – gets built?
Because, according to independent energy consultants contracted by the Legislature, developing a Plan B project in parallel with the Alaska LNG Project could imperil both.
In a short, smartly laid-out presentation given to the Senate Resources Committee on Thursday, Janak Mayer and Nikos Tsafos of Enalytica, a Washington D.C.-based energy consulting firm, outlined numerous problems created by pursuing both projects in parallel, chief among them being
- increased costs due to competition for supplies and labor,
- delays in project approval from regulators who would be unlikely to approve two projects at the same time,
- decreased interest from Asian buyers due to perceived misalignment between the producers and the state, and
- difficulty in securing financing due to project uncertainty.
Mayer and Tsafos also highlighted some serious questions about the state’s ability to pursue a project on its own, including where the gas would come from, who would provide the technical expertise, and how the state would pay for the multi-billion-dollar investment?
At the end of last month, the Legislature passed a bill that would nix the Governor’s plan to ramp up Plan B project efforts. Just yesterday the Governor vetoed that bill and legislative leadership is no doubt at this very moment in deep discussion aimed at garnering the two-thirds vote needed to override the Governor’s veto before the legislature adjourns on Monday.
The decision on whether or not to override the Governor’s veto will likely be the most important policy call made in these waning hours of the legislative session.
Please help inject some much-needed public guidance into this rapidly unfolding – and very high-stakes – struggle between the Governor and the Legislature by contacting your legislator today and urging them to override the Governor’s veto and stay the course on the carefully-laid-out Alaska LNG Project path the state committed to last year.
Trevor Fulton is a former energy and natural resources policy aide who from 2007 until recently worked for a range of legislative offices, including House Resources, Senate Energy, Senate Resources, and Senate Finance committees, as well as the Commissioner of the Department of Natural Resources. He currently resides in Anchorage.
