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Vol. 17, No. 53 Week of December 30, 2012
Providing coverage of Alaska and northern Canada's oil and gas industry

New AGDC bill to be offered, separating agency from AHFC

The Alaska Gasline Development Corp., AGDC, was established by the Alaska Legislature in 2010 to develop an in-state natural gas pipeline, called ASAP — the Alaska Stand Alone Gas Pipeline.

AGDC was set up as a subsidiary of the Alaska Housing Finance Corp. with a legislative mandate to get North Slope natural gas to Alaska consumers at the least possible cost. The original legislation, House Bill 369, established a timetable for the project and required that a project be presented to the Legislature by July 2011.

AGDC met the project requirement, but has been working with what it calls an optimized schedule and is now looking at first gas in 2019, rather than in 2015 as mandated in HB369.

A bill to expand AGDC’s authority was introduced last year by House Speaker Mike Chenault, R-Nikiski, and championed by one of the co-sponsors, Rep. Mike Hawker, R-Anchorage. House Bill 9, 32 pages in length, passed the House in March of 2012, but failed to find traction in the Senate.

Chenault and Hawker told a Dec. 20 meeting of the Alaska Legislature’s Joint In-State Gas Caucus that a bill based on HB9 would be pre-filed for the upcoming 2013 Legislature.

Hawker said the new bill, currently 42 pages in length, expands on HB9, and is intended to provide AGDC “with the greatest possible power to advance that in-state natural gas pipeline.”

Statutory obligation

Hawker said the agency would continue to have the statutory obligation to get that natural gas to Alaskans at the least possible cost, and he said that if the project being worked by TransCanada and the North Slope majors under the Alaska Gasline Incentive Act, AGIA, or any other “purely private sector” line comes to fruition, “AGDC will be there able to play a role representing our interests.”

If a private sector project doesn’t come together, “we will be able to pursue a project that continues to meet the needs of the State of Alaska.”

He said he and Chenault “believe in the private sector,” but believe the state needs to provide “an environment and a catalyst that will move projects forward and should the private sector be unable or unwilling to perform, we have to look at getting natural gas into the hands of Alaskans as a public works project, just like highways, water and sewer systems. ...”

AGDC has “elevated the energy security for the state of Alaska to a priority state mission,” Hawker said.

The new bill is based on HB9, he said, and is a project compatible with AGIA, not competitive.

If an AGIA project goes ahead, AGDC will give the state a seat at the table; if AGIA turns out to be a dead end, AGDC can “move Alaska’s gas forward at the direction of the Legislature,” Hawker said.

Significant change

Hawker said there is one significant change in the new legislation: It “will physically relocate the operations of AGDC as a corporate entity out of Alaska Housing Finance Corporation.”

AGDC has been a subsidiary of AHFC, but he said it’s time to “move AGDC into the big leagues,” and the legislation would establish it as a standalone public corporation in the Department of Commerce and Economic Development. AGDC would, he said, exist much like the Alaska Railroad and AHFC exist, with AHFC’s corporate statutes used as a template.

AGDC would have its own board of directors and the legislation proposes that the governor would appoint directors with “specific expertise in the things necessary to build, operate, manage pipeline and distribute natural gas.”

As in HB9, ANGDA — the voter-created Alaska Natural Gas Development Authority — would be preserved as “a marketing entity for the state’s gas,” Hawker said. A pipeline builder has to be separate from a pipeline shipper and ANGDA would be able to act as an aggregator and marketer to help coordinate gas buys for Alaska communities and utilities who individually “may not have the wherewithal nor the, both the level of demand nor the economic ability to make 30-year long-term commitments,” he said.

Hawker described the new bill has having “all of the provisions we had in the last House Bill 9 as well as some optimization” to provide statutory authority AGDC needs to move forward, including removing “some of the bureaucratic roadblocks” that AGDC faces.

The bill would allow AGDC to issue revenue bonds, project financing based on the merits of the project, and allow for confidentiality so that AGDC can exchange data with commercial entities and other state agencies.

Contract carrier

Hawker said there have been technical revisions and improvements to the section providing the regulatory framework for contract carriage, which would be a separate section within Regulatory Commission of Alaska statues so current RCA regulations and statutes won’t be impacted.

The new section on contract carriage would be applicable to any project, not just AGDC.

And the legislation would make sure AGDC has “the statutory authority to conduct further build outs” and projects that would deliver gas to other areas of the state. This won’t change what the Alaska Energy Authority or the Alaska Industrial Development and Export Authority do, he said, but would allow AGDC to facilitate pipelines throughout the state once the decision is made to do a project.

Funding

The maximum state investment in AGDC would be $400 million, Hawker said.

There is $200 million which has been parked but must be re-appropriated for the project, he said. The governor has proposed $25 million in his budget, and about $100 million more is needed to bring the total to $400 million, including some $73 million previously committed.

Hawker compared this $400 million to the $500 million the state had put into AGIA.

The $400 million, he said is “money in the hands of a state agency that we can control that is accountable to us and ultimately to the people of Alaska,” which he contrasted to the $500 million where there is “no accountability to the people of the state of Alaska.”

—Kristen Nelson



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