Legislators hear AGDC update Aug. 24-25

The Alaska Legislature’s House and Senate Resources committees have scheduled joint hearings on the new concept plan for a state-led pipeline from the Alaska Gasline Development Corp.

The hearings will be from 1-4 p.m. Aug. 24 and 25 in the auditorium at the Anchorage Legislative Information Office and will be teleconferenced.

Backup information posted for the hearings includes a July 13 letter to Senate Resources Chair Cathy Giessel from then acting Attorney General James Cantor, responding to an inquiry as to whether AGDC has the authority under Senate Bill 138 to change the model for the Alaska LNG project.

Cantor said the Department of Law concludes “AGDC is acting within its statutory authority in proposing a restructuring of the Alaska liquefied natural gas project.”

The proposed restructuring, he said, would have the state take the lead in the effort to monetize North Slope natural gas. “At present, AGDC’s proposed restructuring is still being worked out,” Cantor said.

AGDC President Keith Meyer has discussed AGDC or an affiliate owning infrastructure, “or sharing ownership of the project infrastructure with one or more of the gas producers” or with outside investors, with cost funded through third-party project financing “that may or may not include any significant equity contribution from the project infrastructure owner(s).”

The role of the producers, Cantor said, could be as shippers or perhaps as sellers at the wellhead, or both. “The project company would toll gas through the system for the shippers, or it or an affiliate also might be a shipper itself by purchasing gas at the wellhead, transmitting it through the system and selling it to third party purchasers at the marine terminal.”

He said the nature of the restructuring is “in flux” and “the subject of on-going discussions between AGDC and the producers.”

AGDC’s statutes “do not dictate that any particular structure be used” in developing an AKLNG project, he said, and do not “prohibit or require” the percentage of AGDC’s ownership in the project.

And the heads of agreement signed in early 2014 specifies that the multi-party structure it envisioned was applicable only to the pre-FEED stage and that how to proceed to the next stage was at the discretion of each of the parties.

The joint venture agreement which superseded the heads of agreement, like the HOA, covers only pre-FEED, he said.

- KRISTEN NELSON