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Senate decision to postpone funding could delay in-state gas project, ANGDA says
A few days after issuing an exclusive license under the Alaska Gasline Inducement Act, state lawmakers also set aside money to let the state start implementing that license. But lawmakers didn’t approve the entire slate of appropriations requested by Gov. Sarah Palin in early July, postponing most funding decisions until the next regular session.
Senate leaders said the move allowed lawmakers to give money only to those projects requiring immediate funding. The other projects will be considered through the traditional funding cycle tackled by lawmakers every year.
But among the appropriations left on the table was $25 million for the Alaska Natural Gas Development Authority to advance an in-state gas project. ANGDA Chief Executive Officer Harold Heinze believes the delay in funding could threaten the timing of that project.
According to Heinze the $25 million would have given ANGDA a chance to hire contractors to fill major pieces of the in-state gas puzzle.
Because state procurement rules require appropriations to be in place before contracts go out to bid, ANGDA now must wait until next year to know if it can move forward on the project, which could mean missing some or all of the next summer work season.
“Sometimes being a month ahead keeps you from being a year behind,” Heinze said.
Inappropriate appropriations State lawmakers bundled the supplemental AGIA appropriations into a broad energy assistance package passed on Aug. 7. Like that energy package, the House and Senate initially took a different approach to those supplemental appropriations.
But nowhere did they differ more than on the ANGDA funding.
The House version of the bill introduced on Aug. 4 reduced or eliminated six of the seven administration requests, leaving only the $25 million for ANGDA intact. The Senate version introduced on Aug. 7 made further cuts, including the entire ANGDA funding.
The administration originally requested full funding of the $500 million in matching grants to TransCanada, the licensee under AGIA. Most of that funding would have come from a re-appropriation from the previous administration. The House cut the $500 million down to $50 million and the Senate further dropped it to $30 million.
The administration also requested $15 million for the state Department of Natural Resources to start work on the pipeline. Both chambers cut that to $5.5 million.
Several of the appropriations involved road and bridge improvement projects.
The House partially funded a $31 million request for improvements on five state highways, and a $75.4 million request for a Dalton Highway reconstruction project. It also eliminated a $23.5 million appropriation to improve the Haines Highway and the Chilkat River Bridge. The Senate pulled all three appropriations from the bill.
Both the House and the Senate eliminated a $42.7 million appropriation for workforce development activities.
The infrastructure and workforce cuts shouldn’t be seen as a challenge to the substance of those appropriations, but to the timing, according to Burt Stedman, a Sitka Republican and co-chair of the Senate Finance Committee responsible for the final bill.
“The common thread of all four is that they should be put forward in the normal capital cycle,” Stedman said, adding: “There’s nothing with these projects that would lead you to think that they should not be in the normal capital process.”
Funding needed for pre-build Stedman included the ANGDA funding in that assessment, questioning the need to immediately fund a spur line while the two main line proposals are still in early stages.
Heinze said ANGDA is in a hurry because of its long-standing goal of building a spur line to Southcentral Alaska before construction begins on the main line.
This “pre-build” option would let ANGDA hire contractors before the massive mainline project clears the marketplace of eligible companies, Heinze said. And should the main line get delayed, ANGDA wants to take its spur line directly to northern gas sources.
To gather enough information for a “go-no go decision” about the spur line, Heinze said ANGDA wants to immediately bid out two large contracts, one for a project manager to handle logistics and another for a design firm.
“Basically, those two contracts would use up just about all of the $25 million,” Heinze said.
A $25 million appropriation would dwarf all previous funding to the voter-created state agency, which has never spent more than $2 million on an individual project.
ANGDA still has $6 million in the bank to spend on contractors this year. Most of that money comes from a special $4 million appropriation lawmakers approved during the last regular session to study the various options for getting North Slope natural gas to markets within the state.
In early July, the Palin administration announced that ANGDA would partner with Enstar Natural Gas, a private utility, on efforts to build an in-state gas pipeline. Those three parties plan to start negotiations soon to see whether a partnership is viable. Heinze said his concerns about the delay in funding don’t extend to those negotiations.
—Eric Lidji
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