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State gas funding at issue Lawmakers grapple with $3 million request for pipeline, LNG efforts Larry Persily Petroleum News Government Affairs Editor
Legislators are looking for more details before accepting the administration’s recommendation to put an additional $3 million into Alaska’s efforts to help move North Slope natural gas to market.
No legislator is questioning that the state treasury and the public would benefit from a gas pipeline, either a privately developed 1,800-mile line to feed mid-America markets or a state-owned 800-mile line to tidewater for liquefied gas shipments to California or Asia.
“I think most of Alaska wants a gas line,” Senate Finance Co-Chair Gary Wilken said at his committee’s Feb. 17 hearing on the funding request, Senate Bill 241.
But some lawmakers are concerned over the lack of specifics on how the money would be spent, Wilken said after the meeting. Others worry that the Alaska Natural Gas Development Authority needs an extension of its June deadline to present a project plan to lawmakers, especially if it doesn’t get the additional funding until spring.
Wilken said he will hold the bill to get more information. “We’ve got to work through those and get some questions answered.” Authority out of money But waiting too long to appropriate the money would delay the gas authority’s work, Steve Porter, deputy commissioner at the Department of Revenue and liaison to the authority, said in a cautionary closing to his testimony before Senate Finance.
The authority has gone through all of the $350,000 it received last year and wants an additional $2.15 million for a changing list of financial, engineering and cost studies as it looks to build a pipeline to Valdez and a liquefied natural gas shipping terminal. The authority, which voters created in November 2002, is supposed to present a development plan by mid-June for a state owned-and-operated LNG export project. The authority also is supposed to review possible in-state uses for North Slope gas.
Although Gov. Frank Murkowski supported the voter initiative that created the gas authority, the administration never endorsed the authority’s $2.15 million supplemental budget request. Then, earlier this month, the administration decided it needed to coordinate the authority’s work with the state’s other efforts to help move North Slope gas to market.
State officials this month started negotiating a fiscal contract with private companies looking to build a gas line from the North Slope into Canada to feed Lower 48 markets, and Porter told lawmakers the state authority needs to spend more time looking at how it could add to the private project instead of going ahead with its own stand-alone line to Valdez. Administration wants leeway in spending money In addition to asking for a boost in funding from $2.15 million to $3 million, the administration wants it shared between the gas authority and the departments of Revenue, Natural Resources and Law, which are in charge of negotiating the fiscal contract for the privately built line into Canada. The governor wants all of the money given to the Department of Revenue, which would parcel it out as needed to the authority and departments, Porter said.
Keeping the authorization broad provides flexibility for the state to respond to whatever needs arise, said Senate President Gene Therriault, R-North Pole, and sponsor of the funding bill.
Senate Finance adopted an amended version of the bill with the $3 million appropriation and directions favored by the administration, but held the bill.
The House Resources Committee heard the same issue a day earlier.
“The money will go to what exactly?” asked Rep. Nick Stepovich at the hearing on the funding request. The freshman Fairbanks Republican said he wasn’t questioning the goal of getting a gas line built, but wants to know more about the administration’s plans for the $3 million. “I’m trying to figure out what good it’s going to do us.” Gas authority could help state negotiations Porter said the administration wants the gas authority to move the standalone LNG export project to the back of its work list and instead spend more time looking at the costs and opportunities for bringing gas to Fairbanks, Southcentral and Interior communities and to help the state in its contract negotiations. In-state access to gas is among the issues under negotiation between the state and the private pipeline applicants.
The three major North Slope producers and MidAmerican Energy Holdings Co. have filed separate applications with the state for a fiscal contract covering a gas line down the Alaska Highway and into Canada.
Rep. David Guttenberg, D-Fairbanks, asked Porter at the House Resources meeting what exactly the state would receive for the extra $850,000 added to the authority’s original $2.15 million request. The Revenue official said it would help cover the state’s expenses in negotiating the contracts with the producers and MidAmerican, but he did not offer examples of costs or specific consultant contracts. Sponsor skeptical authority could be shortchanged The sponsor of the House appropriations bill, Rep. Eric Croft, said after the Resources Committee meeting he is “nervous and skeptical” the administration may divert money needed by the gas authority.
“If Cinderella fell into some money, I’m not sure the stepmother would do a good job managing it for her,” said Croft, D-Anchorage.
The Resources Committee moved Croft’s measure, House Bill 296, to Finance, its final committee, but it did not adopt the administration’s $3 million request and instead moved the bill at $2.15 million for the gas authority alone. Resources Co-Chair Beverly Masek, R-Willow, said the fiscal issues would be decided in Finance, not her committee.
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