March 23, 2004 --- Vol. 10, No. 30March 2004

North Slope Borough drops out of Alaska Gasline Port Authority

The North Slope Borough announced today it is ending its participation in the Alaska Gasline Port Authority, leaving the Fairbanks North Star Borough and city of Valdez to pursue a municipally owned natural gas project on their own.

North Slope Borough Mayor George Ahmaogak Sr. said the borough decided to drop out of the port authority in favor of focusing entirely on private-ownership efforts under the state’s Stranded Gas Development Act.

The borough has a lot at stake in any state-negotiated contract under the Stranded Gas Act, the mayor said. The law allows the state and a private developer to set up a long-term contract for payments in lieu of all state and municipal taxes on a gas line project, and oil and gas property taxes are the borough’s main source of revenue.

Negotiations have been under way for almost two months between the state and two Stranded Gas Act applicants: the three major North Slope producers, and a consortium led by pipeline operator MidAmerican Energy Holdings Co., of Des Moines, Iowa.

“We are a major revenue stakeholder in this process … so we have to zero in on stranded gas. We can’t have our voice diluted by our active participation in other groups with other interests,” Ahmaogak said.

The three-partner port authority has been working since 1999 to put together a deal for North Slope natural gas supplies, pipeline financing and construction and sales contracts needed to build the project that has eluded private developers for almost 30 years.

“We just need to pull back and make it clear that the borough is coming at this as a municipality with a significant stake, not as a developer,” Ahmaogak said in a prepared statement released Tuesday afternoon.

The loss of the North Slope Borough will not affect the port authority’s effort to develop a gas line project, said Fairbanks North Star Borough Mayor Jim Whitaker. The municipal authority believes its potential for tax-exempt financing and an exemption from federal corporate income taxes gives it a significant economic advantage over other potential developers.

Mayor Ahmaogak also noted that the North Slope’s regional Native corporation, the Arctic Slope Regional Corp., is part of the MidAmerican Energy-led consortium negotiating for a state fiscal contract for a gas line project. “It doesn’t make sense for the borough to compete with ASRC over a gas line project,” he said.

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