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House Bill 105 stalled on Senate floor Removes requirement that Interior Energy Project be based on LNG generated on North Slope; requires reports, includes AIDEA items Kristen Nelson Petroleum News
The Senate Finance Committee moved a committee substitute for House Bill 105 April 18. That bill, which changes requirements for the Interior energy project, has been held in the Senate ever since, and was still awaiting action when Petroleum News went to press April 23.
Senate Resources had stripped the Senate version, Senate Bill 50, back to its basics - allowing the Interior Energy Project to look at sources of natural gas other than those on the North Slope by replacing the requirements of Senate Bill 23, passed in 2013, that the LNG production plant and affiliated infrastructure be “on the North Slope,” with a requirement that the LNG plant and infrastructure will be “in the state” and will “provide natural gas to Interior Alaska as a primary market.”
The original bills adjusted a number of Alaska Industrial Development and Export Authority bond and loan thresholds and deleted out-of-date project authorizations. While Senate Resources removed the bond and project authorization section, they were added back in Senate Finance, which had both HB 105 and SB 50 to work with.
Geographic flexibility The bill in the version on the Senate floor says in intent language that while geographic flexibility has been provided, the goals remain to “bring affordable natural gas to as many residents of Interior Alaska communities as possible as quickly as possible” but also says the act “does not expand the scope of the project nor authorize any other activity beyond accomplishing those stated goals.”
It also requires AIDEA to “use an open and competitive solicitation process to select private entities to participate in developing” the LNG plant and infrastructure described in the bill.
The bill includes language prohibiting AIDEA - without first obtaining Legislative approval - from entering into a gas supply contract unless the contract is for the benefit of an LNG or distribution utility owned by the authority or a subsidiary of the authority.
AIDEA is also prohibited - without prior legislative approval - from purchasing or acquiring “gas reserves or a gas lease” or becoming a working interest owner. This issue was discussed by AIDEA, which was concerned it might prohibit the agency from helping to finance oil and gas projects in the state, such as Mustang, as an interest in the project can be a step in providing financing.
For financing a project providing natural gas to Interior Alaska, members of AIDEA are required to approve a plan by resolution, including: identifying source of natural gas or propane; including estimated cost of the project; and including estimated cost of natural gas or propane supplied to Interior Alaska natural gas utilities prior to distribution to consumers.
AIDEA is also required to submit a quarterly written report to the Legislature on the Interior energy project, including: project progress on all components; update on status of local distribution infrastructure build out; to-date and anticipated conversions to natural gas; and accounting of all funds spent and anticipated to be spent. If requested, AIDEA will also provide a briefing to the Legislative Budget and Audit Committee.
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