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Alaska Senate passes bill to advance gas project

Published on NewsOK Modified: March 18, 2014 at 10:27 pm •  Published: March 18, 2014
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Wielechowski, D-Anchorage, said he worried the administration, under pressure to get the companies to sign a deal, would be making "concession after concession after concession." He said the bill lacked limits for what could be on the table.

Gas line, yes, Senate Minority Leader French said, "giveaway, no."

The bill, as rewritten in the Senate Finance Committee, would set a gas-tax rate at 13 percent of the gross value at the point of production beginning in 2022. The tax rate, together with royalty, determines the state's equity share, which would be about 25 percent, Balash has said.

The bill also would have the AGDC hold the state's interest in liquefaction and marine terminal facilities. There would be separate funds for the liquefied natural gas project and smaller, in-state gas pipeline AGDC has been pursuing. There also would be a project manager for the larger project.

The bill also included a provision, particularly important to some rural lawmakers and key to their support, that would allow for a portion of the state's royalty revenue from the project to go toward energy projects in areas without direct access to a North Slope gas line.

During floor debate Tuesday, some lawmakers questioned the role of TransCanada and whether the state was getting a good deal.

As currently proposed, TransCanada would hold 25 percent interest in the pipeline and treatment plant on behalf of the state. The state would have until the end of next year to exercise an option to buy back some of that equity.

French, D-Anchorage, said he likes TransCanada but it appeared the administration "sort of chickened out" of a possible legal fight over ending its relationship with the company under the inducement act by opting into the currently proposed arrangement.

Sen. Pete Kelly, R-Fairbanks, said if the state had to go it alone, it could not afford other functions of government, in addition to the project obligations. He said this was a moment to show some courage and work to get a project going.

Stedman, R-Sitka, said the state is not aligned with the oil and gas companies with TransCanada involved. While there are fears about whether the state could afford to participate in a project without TransCanada involved, Stedman said the state could use earnings from the Alaska Permanent Fund to finance its own way.

Under the agreement with the company, the state faces paying TransCanada's development costs plus 7.1 percent if the project is not sanctioned.

Senate Majority Leader John Coghill, R-North Pole, noted there are risks involved and said he'd be watching carefully to make sure any deal brings value to Alaska.

But he said the state has gas, knows there's a market for it and knows there are energy needs in Alaska.

"We've got to keep plugging forward," he said.

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SB138: http://bit.ly/1fQLlkF