Alaska LNG project waiting on contract approval

Alaska LNG project waiting on contract approval

Governor Bill Walker has said he will not call a special legislative session on the Alaska LNG project until he has a deal to present to the Alaska Legislature.

Gov. Walker says he’s waiting for progress to be made in negotiations between the state and the natural gas producers (BP, ExxonMobil and ConocoPhillips) that will provide, in part, fiscal, marketing, expansionary and tax terms for the project.

“Until we have enough in the process to present to the legislature, I honestly in good conscience can’t lay that out to them and say please take the action that would be put before the voters to change our constitution,” Walker said.

Senator Bill Wielechowski (D-Anchorage) meanwhile, says at this point the biggest obstacle for the LNG project is that contract.

“It hinges on the willingness of the producers to come to an agreement to build the pipeline and you hear different things and until I see a contract before me I’m not convinced we are closer,” Wielechowski said.

Walker says the good news for Alaska is that the state is working with good companies, but the problem is his administration inherited a slow-moving process and the biggest challenge to this project is time.

“There’s more gas in the world than there is market and once those markets are all full on long term contracts our gas will not be needed,” Walker said.

In Dec. of 2013, a memorandum of understanding was signed by the state and TransCanada stating Alaska must decide whether or not to buyout the corporation by Dec. 2015.

In order for the buyout to happen before that deadline, Walker says the legislature must approve an appropriation estimated at $100 million. For an appropriation to be approved, a special session must first be called.

Senator Charlie Huggins says half of October has already been burned by the Governor giving the legislature less time to make a decision on the TransCanada buyout. Huggins adds if the buyout is approved, it’s still a risky situation for the state.

“The state takes the burden of financing the 25 percent of it,” Huggins said. “That’s an important number to come to grips with in what the different techniques are to do that financing.”

Walker says additional funding would be required if TransCanada’s stake is bought out, which would also require legislative approval. He also says the producers want “fiscal certainty” or financial backing from the state, something that would require a ballot measure. These are all things that Walker says could potentially be discussed at a special session.

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