October 06, 1999 --- Vol. 5, No. 48October 1999

Port Authority passes; Yukon Pacific says project can now be smaller

The Oct. 5 vote in the Fairbanks Northstar Borough, the North Slope Borough and the City of Valdez was overwhelmingly in favor of the establishment of a port authority for moving Alaska North Slope gas to Valdez.

The vote in Valdez, including absentee and questioned votes, was 81 percent in favor of the port authority: 1,037 yeas and 246 neas.

The Fairbanks Northstar Borough vote, not including absentee and questioned votes, was 75 percent in favor: 9,742 yes and 3,290 no.

In the North Slope Borough, unofficial results were 80 percent in favor of the port authority, with 1,661 yes and 425 no votes. The 313 uncounted absentee and questioned ballots are not enough to change the outcome.

The port authority project will include buying natural gas, building the gas pipeline and the liquefaction plant at Valdez and selling the liquefied natural gas. Tankers are not included. A conditioning plant on the North Slope might be built by the port authority or might be built by the gas sellers.

Revenues from the project will go 10 percent to original members of the port authority, the North Slope Borough, the Fairbanks Northstar Borough and the City of Valdez; 30 percent to Alaska communities; 60 percent to the Alaska Legislature.

Yukon Pacific officials jubilant

In response to overwhelming votes in favor the establishment of a gas line port authority, jubilant officials at Yukon Pacific Corp. told PNA Oct. 6 that they congratulate the three mayors and those whove been working on the concept and look forward to working for the new port authority.

Yukon Pacific, which holds major permits for construction of a gas pipeline from the North Slope to Valdez and construction of a liquefied natural gas plant at Anderson Bay, pulled out of the ARCO Alaska Inc.-led North Slope gas sponsor group in July.

Jeff Lowenfels, president of Yukon Pacific, called the port authority vote a quantum change a paradigm shift. He said Yukon Pacific is very excited about the vote and looks forward to working for the port authority.

We think this really does change the economics of the project and we are very excited as Alaskans that this gives an opportunity for Alaska to participate in development of its own resources.

Project can now be smaller

Lowenfels and Wayne Lewis, vice president of Yukon Pacific, said that the port authority structure will allow the project to be smaller.

The 14 million ton a year project, Lewis said, was necessary because before the port authority the Alaska North Slope LNG project had to pay federal and state income taxes. With that tax burden removed, he said, it completely changes the need to have a huge project it changes the economies of scale so it influences how big the project needs to be in order to achieve those economies of scale.

Lowenfels said that with the port authority, the project is now expected to be about 9.5 million tons a year, 1.5 million tons for use in state and 8 million tons for export. He said the smaller scale of the project also results in additional reduction in cost over and above the reduction you get from the tax savings.

And, Lewis noted, its easier to find a market for 8 million tons of LNG a year than for 14 million tons a year.

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