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Vol. 16, No. 23 Week of June 05, 2011
Providing coverage of Alaska and northern Canada's oil and gas industry

Death knell for ANGDA?

Voter-mandated public corporation may not have funding, board members, to continue

Eric Lidji

For Petroleum News

The Alaska Natural Gas Development Authority is facing an existential crisis.

The public corporation of the State of Alaska, created by a voter initiative in 2002, is waiting to find out whether it will have the money to continue operating through the end of 2012, and whether it will have the authority to continue operating into June.

“At this point, this organization has no future beyond the next fiscal year,” ANGDA CEO Harold Heinze told his board at a May 26 meeting. “That’s the plan. So everything has to either get done, or I have to sell something, or I’ve got to find a rich uncle somewhere.”

The Alaska Legislature approved a $319,000 appropriation for ANGDA in the FY 2012 operating budget, but Gov. Sean Parnell has yet to announce his line item vetoes.

Without the money, ANGDA would be forced to cut much of its spending plan for the year, but even with the funding, ANGDA might not be able to conduct business for long.

Currently, three seats on the seven-member board are empty and a fourth, held by Chairman Scott Heyworth, expires on June 5. If none of those seats gets filled, the board would no longer have a quorum to conduct business. As it stands, the board must vote unanimously in order to get the four votes required by statute to take any action.

Envisioned as a way to promote development of a natural gas pipeline from the North Slope to Valdez, ANGDA faced obstacles almost immediately. In its first year of operation, ANGDA fought to get any funding at all because some lawmakers wanted the agency to share an appropriation with an overall state effort to promote development.

Because a natural gas pipeline is a keystone issue in the economic policy of every recent Alaska governor, ANGDA shifted its role to meet the desires of three administrations. That decision drew the ire of some voters and lawmakers, but ANGDA said it always operates within its statutory authority and remains the sole voice of the people on gas issues. Now, Heyworth said, the Parnell administration and Legislature are “pushing us to zero.”

Another notch on the belt

Despite those uncertainties, ANGDA is crafting a work plan for the rest of 2011.

With the $319,000 budget line, ANGDA could keep working on several long-standing projects, Heinze said. Those include open season negotiations on the Alaska Pipeline Project and the Alaska Stand Alone Gas Pipeline, its proposal for propane distribution network and its efforts to improve gas supplies for utilities in the Cook Inlet region.

“With that level of funding … these are things we can do,” Heinze said. “Now we can’t do a whole hell of a lot more than this, but we can at least do these things.

But ANGDA is also tightening its belt.

In recent weeks, ANGDA allowed several large contracts to expire, renewed others at significantly reduced rates and shortened the term of contracts going forward. Those include two of its longer running contracts, one for Tony Izzo to coordinate gas supplies for utilities and another for Mary Ann Pease to coordinate the proposed propane project.

Heyworth said that ANGDA returned its company car to save money, and even sought unsuccessfully to become eligible for donations from the general public through “Pick Click Give,” the Permanent Fund Dividend Charitable Contributions Program.

When allowable, Heinze said, ANGDA used money from its capital budget in recent months to pay for operating expenses — such as when staff works on contracts — a move that he told the board falls within the bounds of budget appropriation language.

Currently, ANGDA can call on $561,704.33 in uncommitted funds. A $319,000 appropriation from the FY 2012 operating budget would bring that up to $880,704.33, allowing ANGDA to fund its $663,200 FY 2012 spending plan with money left over.

“This is pretty small, but we believe it is a manageable sum,” Heinze said, noting that if any project in the portfolio “takes off,” then ANGDA would need to secure more money.

Even considering all that, though, Heinze remains optimistic. “We think we’ve positioned ourselves to make it through the next fiscal year and do some good work,” he said.

This is not the first fiscal crunch for ANGDA.

Heinze said he considered going to three-quarters time last year to help free up money, but, ironically, ANGDA got saved by backing out of its B2F (Beluga to Fairbanks) project, a proposal by former Gov. Sarah Palin to build a natural gas pipeline from Cook Inlet to Fairbanks.

Quorum issue imminent

Even if ANGDA survives a shrinking budget, it may not survive a shrinking board.

“We’ve looked for 14 ways sideways around this, but the statute is clear: A quorum is four and you can’t do anything as a board unless there’s four,” Heinze said.

Parnell appointed Kenai City Manager Rick Koch to the board in August 2010 and re-appointed Donald Benson in October 2010, but stopped filling empty seats after beginning his first full term in office this past January. Asked whether it planned to let the board drop the three members, the administration failed to respond by press time.

Heyworth said ANGDA sent two letters to Parnell in recent months asking for a meeting to discuss the issue, but so far have not gotten an answer from the administration.

To allow the agency to keep operating in the event that its board can’t meet, the board gave Heinze permission to “implement and modify” contracts of $25,000 or less, up to a total of $150,000, without board approval throughout FY 2012. The resolution also requires ANGDA to continue seeking answers about its future from the administration.

“If this is the death knell for the organization, let’s get it over with,” member Bill Jeffress said. “But I would like to try all the avenues that we could to get a definitive answer.”

If the administration wants to shut down ANGDA, Heinze said he would oblige, but would ask for three months “to close it out properly. There’s a lot here in public funds.”

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