House Finance advances gas line bill

Published on NewsOK Modified: April 18, 2014 at 11:09 pm •  Published: April 18, 2014

JUNEAU, Alaska (AP) — The House Finance Committee on Friday advanced a bill setting the state's participation in a major liquefied natural gas project, with members expressing a mix of both optimism and skepticism about whether the process would yield a long hoped-for gas line.

Co-chair Bill Stoltze, R-Chugiak, said he saw a lot of will and desire to get a project done but noted the process is still in its early stages. Rep. David Guttenberg, D-Fairbanks, said he wants a project to be successful because of the positive impact that could have on state revenue. But he said he worried about another "false start."

SB138, from Gov. Sean Parnell, would set at about 25 percent state participation in the project also being pursued by the TransCanada Corp., the Alaska Gasline Development Corp., or AGDC, and the North Slope's major players — BP, ConocoPhillips and ExxonMobil Corp. It also is aimed at moving the project — currently estimated to cost between $45 billion and more than $65 billion — into a phase of preliminary engineering and design and cost refinement.

It would allow the state to negotiate project-enabling contracts that would be brought back to lawmakers for consideration, with the expectation that lawmakers will receive confidential briefings along the way in an effort to avoid any surprises.

Amendments approved by the committee in its relatively light rewrite include having proposed contracts provide a way for allocating infrastructure costs between the state and project parties to ensure those costs are shared, not borne wholly by the state. Project agreements also would have to include a means by which gas would be made available should in-state demand increase but the state's gas and producers' gas is committed elsewhere. Such agreements also would not be able to change taxes on existing oil and gas infrastructure, speaking to a concern of some municipalities and touching-up language added in the prior committee. Intent language was also added, calling for the hiring of qualified Alaska workers for engineering, construction, maintenance and other project-related jobs.

Provisions added in House Resources, which did a lot of the heavy lifting on the bill, would require negotiated contracts that need legislative approval be made public at least 90 days before their proposed effective date. It would require legislative briefings on progress at least every four months, accompanied by a written report on the amount of money the state may be obligated to pay TransCanada if a project were terminated before gas starts flowing. It also beefed up from 10 percent to 20 percent the amount of revenue from the state's share of royalty gas in the project, after payment is made to the Alaska Permanent Fund, that would go into a new fund to help with energy projects in communities that won't have direct access to a North Slope gas line.

That fund was a key selling point for some rural lawmakers when the bill passed the Senate last month.

Rep. Bryce Edgmon, D-Dillingham, said SB138 was probably the most rounded oil and gas bill of this heft that he's been involved in.

Continue reading this story on the...