Governor Walker’s “Plan B” for a non-competing, in-state gasline downgrades the entire larger gasline project being pursued by the major producers. Tim Bradner, in a recent article in the Alaska Journal, details the reasons, as explained by industry experts to the legislature recently.
Two consultants to the state Legislature have warned that Gov. Bill Walker’s quest for an expanded state-led natural gas pipeline could undermine the larger industry-led gas project in which the state is also a partner.
“The state and its commitment has become a major risk factor for the Alaska LNG Project,” Nikos Tsafos, of the consulting firm Enalytica, told the Senate Resources Committee April 16. “A process where the state is appearing to pursue two projects at the same time could undermine both.” Tsafos and his partner Janak Mayer appeared before the committee.
Some damage may have already been done because the impression in the market that the governor may move the state in a different direction has raised questions about how firmly aligned the industry group and the state really are on the project.
Tsafos and Mayer, in their presentation to the Legislature, said the governor’s concern that any one company in the consortium could block progress is legitimate but that there are simpler solutions than the state developing its own large gas and LNG export project as an alternative.
“The introduction of a new idea (the Plan B) along with the governor’s announced 45-day review (by the state) of the Alaska LNG Project agreements has raised questions about the alignment within the project,” he said.
Maintaining a proper alignment of interests among the industry partners, and the state, is seen as crucial by potential LNG buyers who will be asked to sign the large long-term purchase agreements for the liquefied gas necessary for the project to be financed. There are many competing LNG projects after the same buyers and signs of a lack of commitment by the state will weaken the negotiating position for the Alaska project sponsors.
The state’s position can be a huge factor in the market. “The sovereign stands for a lot,” and its support or even appearance of lack of support will reinforce Alaska LNG or undermine it, he said.
See Full Story at Alaska Journal of Commerce
